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Strategic analysis for investors

Daniel Liberto explains how investors can become better at examining a company's competitive position
June 6, 2019

Investors often buy shares without doing their own homework. Nobody likes to lose money, yet people continue to invest hard-earned capital in companies they know little about.

Backing the right company requires a certain level of commitment. The goal is to figure out what shape it’s in, how it’s set up to deal with what lies ahead, whether it can operate better than before and, finally, if other investors have factored these projections into the share price. Often laziness prevails and these important considerations are sidestepped or outsourced.

A popular approach is to ride the wave of momentum and big themes. Some investors assume a company that’s made shareholders lots of money in the past will continue to do so, or that one catering to a megatrend is destined to succeed, even if it has loads of competitors.

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