What are the main things that you should know about a stock before investing?

One of the main thing you should know about is the volatility of the stock price -aka riskiness of the stock. When you invest into a stock it is not a sure win game (unless you are doing arbitrage, but thats a different story) , so you are essentially taking on a risk when you decide to do so as prices of the stock and go both ways - up or down. The extent of this movement up or down is the "riskiness" of the stock which you will be exposed to. So, understanding this riskiness in the form of standard deviation of the stock price is important as you can then gauge it against your own risk profile - are you a risk taker? are you willing to make big losses for a chance to make big gains? if you are, then you are more inclined to invest in riskier stocks, and vice versa.

Understanding your tolerance will help guide you in creating your investment portfolio, and having a portfolio tailored to this tolerance will definitely help you sleep better at night as you will be comfortable with the level of risk you are taking!

Hi there!

Here are 2 main things that you can look at:

1) Industry that the stock belongs to:

This is important a stock's performance is usually highly correlated with the industry that it is in. Also, different industries perform better/worse at various stages of economic circle/have different volatilty due to its reliance/exposure to macroeconomic factors

For instance, you could be looking at stocks in the healthcare, consumer staples as well as utilities industry if you are looking at buying a stock that is more reccession-proof/less volatile. On the other hand, energy stocks are highly volatile due to the changes in oil prices/geopolitics that can potentially change price/supply of oil.

2) Multiple of the stock relative to its peers in the similar industry

Multiples such as P/E and P/B ratios will determine if the stock is "overpriced" or "underpriced"; comparing these ratios with its peers in similar industry will give you a clearer understanding as to how this stock fares and if you should choose to buy it over other stocks in the same industry.

Hope that helps!