Things you might want to consider before you start share market journey

 Things you might want to consider before you start Share Market Journey

You must understand the business model of a company before you decide to invest in its shares. The business model of a company is the representation of the way that it works. It is a plan that the company has put into practice so that it can earn revenue and make its operations profitable. Harvard Business School conducted a study where it espoused the characteristics of a proper business model. The model should be aligned with the company’s goals. It has to be robust, and it should reinforce itself. When you understand the business model of the company you know the sources from which it makes money. 

 

You must analyze the industry 

 

Before you invest in the share market find out about the industry of the companies where you wish to invest. Find out how much the industry would grow in the days to come. These industries are divided into parts that are known as sectors. This is a cluster of industries that are related closely to each other. As an example, take the healthcare industry that is connected to other industries such as pharmaceutical, biotechnology, and medical devices. You need to follow some steps in this context like checking the trends of the company.

 

Look for a competitive advantage 

 

This is an important part of investing in the stock market. Authentic competitive advantage is something that you can never buy. You cannot copy it as well. One way in which you can identify how competitively advantageous a company happens to be is by looking at how it functions. As an investor, you should also know about the companies that are competing with your preferred company. Find out if your preferred company has any advantage over its competitors or not. If a company has a great competitive advantage it would earn profits in bad market conditions too.

 

Condition of the company’s management 

 

Before you make any equity investment in a company, please find out the condition of its management. The decision-makers of a company are its backbone too. This is because they make important decisions. They also play a major role in determining how well the company would perform in the days to come. You should find out as much as you can about the leading officials. How long have they worked with the company? What roles do they play over there? What are their main responsibilities? Find out their experience and educational qualifications.