One of the most straightforward ways to reduce the risk of any investment is through research.
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Conducting a detailed analysis on an investment opportunity increases the chances of finding any skeletons in the closet. It also helps build out the investment thesis, which will ultimately help produce a realistic estimate of the company's intrinsic value.
Without conducting detailed research before buying into an investment, an investor is effectively betting that the price will increase. That's not investing. It is speculation.
However, research has both benefits and drawbacks, and completing too much research can be detrimental to your financial health.
The value investor Mohnish Pabrai...
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