Want a simple, effective framework for analyzing a stock before you invest? I rely on a model called EIC (Economy, Industry, Company) , a straightforward approach also used by banks and credit institutions.
It breaks down your analysis into three simple steps:
Economy (E): Start by looking at the big picture. Is the economy growing or stagnating?
Industry (I): Next, focus on the specific industry (e.g., retail). How are its numbers looking? Has it been stagnating, or are people buying more over the last few years? This gives you an industry indication.
Company (C): Finally, zoom in on the specific stock. Is this company performing better or worse than its peers?
By assessing the economy, then the industry, and finally the company itself, you build a solid foundation for your investment decision.
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What stock are you going to apply the EIC model to first?
