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Investment History 101

2012 Aug 28

Investment history is defined by a free online dictionary for investment and investing as the past relationship between the dealer-broker and the investor. Investment history is very important in order to easily get credit approval if you are investing in a new business and in expanding your old business.

 

Underwriters usually require investment history in order to analyze if the investor is in good standing and entitled to fresh loans in order to expand his or her business, or to invest in new stocks or buy or resell existing bonds. Actually, issuing investment history is required by the National Association of Securities Dealers (NASD) in order to analyze the performance of security-issuing entities, be it an investing individual or an investment company, in order to give them a “go” or a “stop” in issuing bonds or securities. 

 

NASD also uses this instrument to provide a concrete set of standards in business, particularly on selling and buying of stocks, pricing of bonds, and other forms of investments. 

 

Aside from the standardization of some business and/or investment practices, this document or information can also be of good use in giving leniency to businesses and underwriters, when some bad investments or nonperforming debts occur. 

 

Since capital markets are still volatile or uncertain, still in connection with the international financial crises that occurred in the late 2008, business experts know that there is a need to issue some exceptions to the rule or to be lenient sometimes, to businesses that have occurred much losses, in paying their obligations in order to allow them to come up with good business plans, or to do some restructuring in order to pay their outstanding loans or obligations. 

 

On the other hand, it is also very important to keep track on how certain bond or security-issuing entities performed in the past business cycles in order to lower the risk of bad debts and non-performing loans and assets. It is also gives a blanket protection to future investors not to fall prey to investment predators. 

 

As a rule, it is always good to examine, thoroughly, the background of some businesses entities or institutions before investing in order to ensure profits and lessen the risk of huge losses, especially now that the market remains volatile because of the economic crisis. 

 

Next article: Investment Risk Today





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