Habit #2: Know basic accounting

Accounting is the language of business.

You need to understand basic accounting to identify good companies from the bad ones based on their past financial performance.

You have no right to invest in the stock markets if you not able to read the financial statement.

Yes, I totally agree with this points. By reading the financial statement and dissect the numbers, give retail investor like us able to find out a good companies, gauge the intrinsic value, and buy it when there is a satisfied margin of safety.

"In the business world, the rearview mirror is always clearer than the windshield." - WarrenBuffett

Every companies listed in bursa, provide the quarter and annual financial statement. And each financial statement, consits of 3 main components, i.e. Income Statement, Balance Sheet and Cash Flow Statement. Do take a look on it and check out how's the company performance.  

There is no free lunch in the investment world. And, it is a expensive lesson if a retailer buying into a stock without looking on its financial statement. Do always check out the latest result released for your companies and keep an eye on when is the next quarter result release.

 

"If you don't study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards. " - Peter Lynch

"An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative. " - Benjamin Graham

 
 
Refences:-

• Five Habits of Highly Successful Investors, Safal Niveshak
• Financial Statement Analysis 
• Income Statement Analysis
• Balance Sheet Analysis
• Cash Flow Statement Analysis
• Latest Quarter Result for Bursa listed companies
• Upcoming Quarter Result for Bursa listed companies