Investors should spend more time researching stocks instead of making quick decisions based on superficial information, according to investment strategists. A recent analysis reveals that retail investors typically spend only six minutes researching a stock before investing, which experts deem insufficient and risky.

Financial experts advise individual investors to thoroughly understand the companies they invest in, going beyond just looking at price charts. It is crucial to delve into a company’s business model, competitive landscape, and the industry it operates within.

While analyzing financial statements may seem daunting, experts suggest focusing on key areas like the management report and company teleconferences. These resources provide valuable insights into the company’s current situation, challenges, and the perspectives of professional analysts. The five-year overview found in annual reports offers a concise summary of the company’s performance over time, including revenue, earnings growth, and debt levels.

Investors are cautioned against relying solely on the price-earnings ratio to assess a stock’s value. This metric should be used as part of a broader analysis, considering other factors such as the company’s location, management quality, and potential for growth.

To avoid impulsive investment decisions, experts recommend developing a clear investment plan, examining fundamental financial metrics, understanding risk factors, maintaining a watch list of potential investments, and diversifying portfolios across different industries, geographies, and asset classes. Creating a foundation of broad and global funds with stocks and bonds is also advised, supplemented by investments in individual stocks after careful consideration.