15 November 2011

Do a Due Diligence on Top Management before You Decide to Invest in Long Term with Them

Frankly, I own 3 S-Chip stocks due to the the reason that I love fast growing company with potential exponential earning growth. Without a second thought, I believe that the company that fulfill my searching criteria would be under my watchlist and I would action when neccesary.

The fact is that, before you invest in a company, you should also know about the entire background of the management, the country itself as well as the culture of doing business there too. I heard from my friend that, those aggresive businessmen would risk themselves by getting so called 'Private Loan' from the underground money lender and grow their business until big enough to cover the interest paid to the money lender, and of course, the interest could be as high as 20% per annum or per month!

As China is approaching a soft landing in its economy, there is no doubt that the banks are tighening the borrowing policy and reduce the loan amount. As what I said, bank always approach you to sell you an 'umbrella' when the day is shinny and get back the 'umbrella' when the day is cloudy and start raining.

So my advice to you is that, before you invest in a company, please make sure to do a due-dilligence on the Top Management and find out their risk appettite as well as the character. If you want to find a business partner (long term partnership), make sure that this guy is trustworthy and have certain level of integrity on its suppliers, customers as well as employees.

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