Before you invest: how to check whether information deserves your trust

You read that a company is about to transform its industry. The chart looks encouraging, the headline sounds convincing, and the comments are full of people who have already bought shares. Before opening your brokerage account, ask a more useful question than “How far could this go?”: what do I actually know, and where did that information come from?

You do not need to turn every idea into a research dissertation. You do need to separate documented facts from somebody’s expectations. Good information can help you understand an investment that later loses money. Bad information can lead to a lucky outcome. The result of one trade does not tell you whether your process made sense.

Write down the claim you want to investigate. “This is a great company” gives you little to work with. “Revenue from its main business has grown, and I want to understand why” gives you something concrete to research. A specific question makes it easier to avoid opening ten tabs that all repeat the same story.

A news article can be a useful starting point. Next, look for the material it draws on: company results, annual accounts, a regulatory filing or the terms of the investment product. For US public companies, EDGAR provides access to filings submitted to the SEC. A company’s investor relations website can also help you locate the relevant documents.

A primary source is not automatically impartial. Management chooses what to emphasise in a presentation. Compare the headline with the accounts, accompanying notes and disclosed risks. The fact that information appears in an official filing does not mean the regulator recommends buying the company.

Try a simple check: can you open the original document and find the number yourself? If five websites quote the same commentator, you do not have five independent confirmations. You have one claim repeated five times. Save the link to the underlying source, not just the article that led you there.

Keep three dates separate: when something happened, the period a figure covers, and when the information was published. An article updated today may discuss last quarter’s results. A screenshot shared this morning may show a price from months ago.

Record the unit as well: dollars or euros, thousands or millions, a total amount or a per-share figure. Check whether a percentage compares with the previous quarter or the same quarter a year earlier. Those comparisons answer different questions. Do not mix an annual figure with a quarterly one without explaining the conversion.

Here is a hypothetical example. A company’s revenue rises from 100 to 120, a 20% increase. You still do not know whether it acquired another business, benefited from currency movements or saw its margins deteriorate. The number can be correct while your interpretation remains incomplete. Your next task is to find the explanation rather than supply one yourself.

All three can appear in a single sentence: “The company increased sales, its strategy is working, and it will dominate the market.” The first part may be verifiable in the accounts. The second needs an argument. The third concerns an uncertain future.

Split what you have read into three lines. Fact: what happened and where it is documented. Interpretation: the explanation the author proposes. Forecast: what would have to happen for the scenario to play out. Then add a fourth line: what evidence would weaken that explanation?

That last question is especially useful when you like the idea. Looking only for supporting arguments can make research feel stronger than it is. Spend some of your review looking for risks and alternative explanations. The aim is to understand the uncertainty you would be accepting, rather than to reject every possible investment.

Being a persuasive communicator does not establish expertise or remove conflicts of interest. Check whether the author holds the asset, receives payment to promote it, or earns money when you open an account through a link. An incentive does not automatically make the content false. It is still relevant context.

The CNMV’s guide to financial content on social media explores risks associated with following finfluencers. A practical lesson for your own process is not to substitute popularity for checking. Followers, comments and confident delivery do not establish that an idea suits your circumstances.

Be particularly cautious when someone pressures you to decide before reading the terms, promises outcomes without explaining risks, or shows only winning trades. If a firm is offering financial services, consult the relevant regulator’s register and warnings. Check the website address and contact details carefully: a similar name may belong to a different organisation.

Before spending more time on an idea, complete this short checklist. A plain note is enough; you do not need to pay for a new tool. The purpose is to make the gaps visible, not to collect documents for their own sake.

• Claim: what am I trying to establish, without promotional adjectives?
• Source: which original document supports it, and where can I find it again?
• Date and unit: what period, currency and comparison does the figure use?
• Explanation: what might explain the observation, and what alternatives exist?
• Incentives: what connection does the author have to the company, product or service?
• Open question: what still needs checking before I consider a decision?

If you cannot complete a line, say so. “I do not know yet” is a useful research outcome. Filling a gap with an assumption and later treating it as a fact is what makes a process unreliable.

You do not need an opinion on every company. If you cannot explain how it makes money, find the original document or reconcile the numbers, you can leave the idea pending. Your attention is limited too. Spending it on a story you cannot check leaves less time for other research.

A useful habit is to finish each review with one concrete next step: read a note in the accounts, check a claim, or return after the next official release. “Keep watching the price” does not, by itself, answer a question about the business.

Momentu is designed to help organise where to look. The checking comes afterwards. You can explore a demonstration of the approach, but an example is not current market information and a score is not an instruction to buy. To turn this checklist into a routine, continue with our guide to reviewing an investment idea in twenty minutes.