Things Investors Should Not Do

Do not buy into promotional companies
One of the very important aspects of investing lies in finding companies that are developing new products and processes or that are exploiting new markets. The newer companies or those that are going to start up are in most cases attempting to do just that. A lot of companies have been created to come up with a new snazzy invention. There are also other companies that have started to be part of certain industries, like electronics and this is one place where there is a lot of probable growth. There is another big group that is put together to find natural minerals and wealth such as gold and silver and this is an area in which the rewards can be very outstanding. Due to these aspects, young companies that have not yet earned a profit on their operations might at first look like they are of investment value.

There is another issue that often times raises interest. This is that it is believe that there is going to be an opportunity to get in on the ground floor if the shares are bought now when they are first offered to the public. The companies that are successful will by now be selling at a few times the price that they were first offered at. Because of this, why should you wait and allow somebody else to take that money? Rather why shouldn’t you utilize the same techniques of investigation and opinion in finding the excellent new enterprise that is being promoted now just as can be used in finding the outstanding established corporation.  

From the investment point of view, there is a fundamental issue that places any company that does not have at least two or more years of commercial operation as well as a year of operating profit in a whole different category from an established company, even one that is so little the it might now have over a million dollars of yearly sales. In the established company, all the biggest functions of the business are already moving about. An investor is able to look at the production of the company, such as the sales, management, teamwork, accounting, etc, etc, and all the sides of the operations involved in it. Probably more essentially, the investor is able to get the opinion of other observers that are qualified and whom are in a spot to see the strengths or weaknesses of the company that is being considered. On the contrary, when a company is still in its initial stages, the only thing that an investor or any one else is able to do is look at it and try to guess what the problems are that are going to arise and which will be its stronger points. This is obviously not an easy thing to accomplish and it allows a lot more possibility of error in the decisions that are made.

As a matter a fact it is such a hard thing to accomplish that it would not matter how skilful the investor is, it would be impossible for him to even get a little idea of the average for choosing good companies that can be attained if judgement is set to certain operations. In a good many cases, younger promotional companies are controlled by one or two people that have a lot of talent for certain parts of the business but that lack in other very important talents that are also needed. Possibly these people are really good when it comes to sales but do not have ability for actually running a business. In a lot of cases these are people that have the ability to produce or invent but that are not aware that even the best products require of skilled marketing as well as the manufacturing of the products. Most investors are rarely in the spot to persuade these individuals of the skills that are lacking in themselves or in their organization and in most cases the investor is not in a position to where he is able to point out to those individuals where those talents are able to be found.

Because of these things, no matter how alluring promotional companies might look at first, financing should always be left to the groups that are specialized at these things. Those kinds of groups have a lot of talent for boosting up weak areas as unfolding operations bring them out to light. The people that are not in the position to give this kind of talent and to persuade new managements of the need of taking advantage of this kind of assistance will realize that investments that are done in promotional companies are a very disappointing experience. There are sufficient great opportunities in between established companies that normal individual investors should always be sure to never buy into promotional company even if it might look appealing.