10 Things You Should Know Before You Buy a Stock

It may seem like a given that you should do your homework before plunking down your hard-earned cash on a company's stock -- but many people don't, according to a new study.

"There are some investors who simply don't carefully weigh their stock-investment decisions," said Brad Barber, University of California Davis professor and co-author of the recent study All That Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors. "Individuals are heavy buyers of stocks that are in the news -- that is true of good and bad news," he said.

As the stock market crash of 2000 taught us, a carefree investing style doesn't work forever; in fact, its success usually comes to an abrupt end. It would behoove investors to relearn that painful lesson before the next crash. With that in mind, today's column offers 10 questions investors should answer before buying a stock, with some input from Pat Dorsey, Morningstar's director of stock analysis and author of the recent book The Five Rules for Successful Stock Investing. ...