Forget rating agencies: how YOU can determine if a company is “investment-grade”
Thursday, 5 January, 2012 Leave a comment
In the current economic climate it is probably easier to decide not to invest…who, what can you trust in the midst of such uncertainty? But opportunities do exist for those who can establish where NOT to invest.
In many cases, the decision is made by examining a corporation’s financial and balance statements and, of course, its rating. In theory, an investor can look into any public company’s books. In practice this is close to impossible. The rating process is also not excessively transparent. What can a private investor do? Are there any mechanisms which would safeguard an investor from making an investment into a company that, on the surface looks good but in reality hides a nasty surprise. The answer is affirmative. Today it is possible to get a quick estimate of a company’s resilience by analysing its financials. Now resilience says nothing of how well the company’s stock is doing, or how likely the company is to pay its obligations. What it does tell you is if the company is able to withstand shocks and extreme events (known as Black Swans).
Since shocks and extreme events are becoming more and more common, this seems to be a good idea. Want to read more? Click here
Want to check out our simple on-line process? Click on the image below.