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. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence ...
  2. Investing

    The act of committing money or capital to an endeavor with the ...
  3. Due Diligence Meeting

    The process of careful investigation by an underwriter to ensure ...
  4. Investment Analysis

    The study of how an investment is likely to perform and how ...
  5. Investment Ideas

    Specific views, plans or ideas on ways to invest money effectively. ...
  6. Research Analyst

    A person who prepares investigative reports on equity securities. ...
Related Articles
  1. Investing

    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. Financial Advisor

    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. Managing Wealth

    How To Avoid Falling Prey To The Next Madoff Scam

    Due diligence does work, but the loose reporting standards for hedge funds make extra care and attention necessary.
  4. Financial Advisor

    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.
  5. Financial Advisor

    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.
  6. Investing

    Defining the 3 Types of Investments

    The first step to being a successful investor is knowing what is and isn't an investment.
  7. Investing

    Where to Invest Your Money? 10 Steps to Financial Success

    Learn where to invest your money ten steps. Included is how to develop a proper investment plan, different investment products and brokerage options.
  8. Investing

    Ten Worst Mistakes Beginner Investors Make

    Here are the ten worst mistakes beginning investors make.
  9. Investing

    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.
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 are some of the limitations of only looking at the rate of return for an investment?

    Learn why only reviewing the rate of return for an investment poses a risk to the investor and what additional factors should ... Read Answer >>
  3. What is the difference between credit rating and equity research?

    Find out how and why investors look at credit ratings and equity research to help inform their decisions for different types ... Read Answer >>
  4. What investments have been the poorest historical performers?

    Learn about low performance investments and how they are used by investors. Find out which investments lose funds and how ... Read Answer >>
  5. 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 >>
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center