Retail investors are increasingly being urged to dedicate more time and effort to researching stocks before investing, as experts warn against making hasty decisions based on superficial analysis. A recent analysis indicates that many individual investors spend only about six minutes researching a stock before buying it, a practice deemed “very risky” by investment strategists.

The brevity of this research contrasts sharply with the thorough analysis conducted by professional investors, who meticulously examine financial statements, earnings, dividends, debt levels, and risk ratios. Experts stress that understanding the fundamentals of a company is crucial for making informed investment decisions.

While diving deep into financial figures can be daunting for ordinary investors, experts recommend focusing on the management report and teleconferences transcripts, often found in the company’s annual reports. These resources provide insights into the company’s current situation, challenges, and the factors that analysts consider important for the stock’s development.

Investors are cautioned against relying too heavily on popular metrics like the price-earnings ratio, which should be used as part of a broader assessment of the company’s overall health and prospects. Diversifying investments across a range of stocks and bonds is also recommended to mitigate risk.