Invest, Then Investigate

DEFINITION of 'Invest, Then Investigate'

An investment strategy where investors purchase a stock first and do research and due diligence second. Invest, then investigate - or investing first and researching next - is a risky and speculative approach to making investment decisions. This method is often used by individuals who have either an unfounded hunch that a security's price will move in a particular direction, or who are acting on impulse. Any research or due diligence is performed after the position has been opened and the individual decides to either hold or close the position. This is the opposite of the "investigate, then invest" approach to investment decision making.

BREAKING DOWN 'Invest, Then Investigate'

Some investors may utilize this strategy to "test the waters" of a trade. If the position is profitable, they can add to it and potentially increase profits; if it is unprofitable, the position can be closed for a loss. Famous investor George Soros is known to invest first and investigate later to avoid missing rapidly changing market opportunities. Many investors would view this method of investing as gambling and prefer, instead, to investigate potential positions first and then risk money to test the theory (investigate, then invest).

RELATED TERMS
  1. Investing

    The act of committing money or capital to an endeavor with the ...
  2. Research Report

    A document prepared by an analyst or strategist who is a part ...
  3. Well's Notice

    Notifications issued by regulators to inform individuals and ...
  4. On Stream

    An investment that is on track to earn its expected return. Stocks, ...
  5. Capital Investment Factors

    Factors affecting the decisions surrounding capital investment ...
  6. Capital Investment Analysis

    A budgeting procedure that companies and government agencies ...
Related Articles
  1. Fundamental Analysis

    Due Diligence

    In the investment world, Due Diligence refers to the full investigation of a product and transaction that a buyer or seller should do before a transaction takes place—to confirm that all ...
  2. Investing

    Asset Manager Ethics: Acting With Competence and Diligence

    Managers must make investment decisions based on their personal investment process, which in turn should be based on solid research and due diligence.
  3. Financial Advisors

    Alternative Investments: Are They Right for You?

    Alternative investments can provide unique benefits to clients for whom they are suitable. But do your due diligence and beware of the risks.
  4. Investing Basics

    4 Investment Mistakes That Will Cost You

    Whether you're just starting out or have been investing for years, mistakes happen. But some of them will cost you big and can easily be avoided.
  5. Bonds & Fixed Income

    6 Things You Think You Understand About Investing - But Really Don't

    Not understanding these investing points could leave you with an empty wallet.
  6. Investing

    Ten Worst Mistakes Beginner Investors Make

    Here are the ten worst mistakes beginning investors make.
  7. Investing Basics

    Investing in Oil: Direct vs. Professional Management (XOM, VGENX)

    Examine the advantages and disadvantages of the direct investment and professional management approaches to investing in the oil market.
  8. Stock Analysis

    Justice Dept. Comes Up Short in Wal-Mart Probe

    After four years investigating bribery allegations against Wal-Mart (NYSE: WMT) executives in foreign countries, BloombergBusiness reports the Justice Dept. is coming away with nothing substantial. ...
  9. Professionals

    Hard and Soft Due Diligence: What's the Difference?

    Learn about the differences between "hard" and "soft" due diligence in a mergers and acquisitions deal (M&A) and why soft diligence is increasingly important.
  10. Personal Finance

    Investing the George Soros Way

    Investing like Soros requires guts and confidence. Investors can learn much from his patience, discipline and research methods.
RELATED FAQS
  1. What's the difference between credit reports and investigative consumer reports?

    Learn about the major differences between two types of risk-evaluation reports: consumer credit reports and investigative ... Read Answer >>
  2. What due diligence steps should an investor undertake before each investment?

    Learn about the steps to completing vigorous due diligence when selecting an investment, including ownership by management, ... Read Answer >>
  3. What are the due diligence basics for investing in a startup?

    Learn about due diligence basics for investing in a startup, which includes an exit plan, a harvest strategy and evaluating ... Read Answer >>
  4. What proportion of my overall investments should be in securities?

    Understand the various factors that should be considered by individuals in regard to investment portfolio management and ... Read Answer >>
  5. What is the difference between risk and opportunity cost?

    Learn the subtle differences between the concepts of risk and opportunity cost as well as how they impact your investment ... Read Answer >>
  6. What is the difference between investing and speculating?

    The main difference between speculating and investing is the amount of of risk undertaken in the trade. Typically, high-risk ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center