Invest, don’t speculate

Instructions

Analyze thoroughly.
Consider the sector and the specific activities the company operates in. Are there no major red flags in this initial analysis?
Protect your principal.
Consider the ways in which the stock may go down. Except for overall market conditions, list the company-specific risks. If the company has been around for a long time, it is more likely to stay around for longer as well.
Decide whether the returns are adequate.
Look at the returns over the last few years. Are these in line with the market, or are they much higher or lower? If they are consistent with the market, you are looking at an investment. In the other case, you might be looking at speculation.
Invest in the company.
If you have passed through the previous steps and answered yes to all questions, you are most likely investing instead of only speculating. Trust your judgment and try not to be bothered by short-term market fluctuations; instead, wait for the long-term results.