What to do when the Stock Market is closed... Due Diligence!

Here we are after a long weekend and you find yourself with another day without knowing what to do when the stock market is closed... Work on Mastering DUE DILIGENCE.  This is a huge subject, so today I will concentrate on some basics. Keep in mind what expectations you have and what percentage you want to profit on a stock.  Always have a plan and stick to it, so Get a pen and piece of paper out and keep notes.

Look at the stock chart first to see if there is potential gains.  Does she have a volume trend, does it look like its been front loaded?  What are here daily averages compared to what she did last Friday. Look to see what the stocks support and resistance is.  If you are in doubt and just learning you can find helpful hints on http://www.ddmachine.com/ until you find your niche.  Everyone has there own opinion on stock chart reading and eventually you will have you own.  At this point if you find she is worthy to continue you can.  This can be your jump off point and decide whether or not to waste anymore time on the company.

Go to http://www.otcmarkets.com/home and check out the information listed there.  Remember it is not always updated so Google for more info.  Check out her website for product market potential, the stocks financials, news, quotes, charts, and even insider trader on this site.  Read EVERYTHING!  It is your money, so make it work in your favor.  Familiarize yourself with the stocks latest 10Q or 10K.  Start at the top and look through everything.  Here is a list to help you get started.

Is she Compliant with sec filings? Is she up to date?

Read her financials (this is basic, eventually you will learn to understand more)

- Is there an unambiguous and complete explanation of the revenue streams?

- How good are the cash flows?

does she have cost of goods?

does she have revenues?

- How accurate is the valuation of their assets?

- Are there any hidden liabilities?

- Are there any irregularities in the financial statements?

- What is the company’s history with financial compliance?

- What have the auditors said about the company figures over the last few years?

- Have authorities conducted any tax related investigations into the company’s finances?

- How reliable are the financial projections?

- Have terms and duration of the overdraft and other credit facilities been disclosed and is there any risk to those facilities continuing?

- Have all articles of incorporation, tax registration certificates, board meeting minutes, shareholding records etc been provided?

- Are there any pending legal cases or threats of action (and has potential damage been quantified)?

merger’s?

This will take some time to master, so be patient.

This is my favorite part of due diligence, Google the CEO!  Finding the dirt on some can be very interesting and you will find they have many webs to weave.

That should keep you busy until next time.  I will continue to write on this subject, so stay tuned!  Have a great reading day and be prepared for the markets to open tomorrow.


In the business world, the rearview mirror is always clearer than the windshield.
Warren Buffett