You’ve all heard the maxim of “Ready, Fire, Aim.” There’s a financial analog, according to Investopedia. “Invest, then Investigate” is an investment strategy where investors purchase a stock first and do research and due diligence second. Invest, then investigate – or investing first and researching next – is a risky and speculative approach to making investment decisions. This method is often used by individuals who have either an unfounded hunch that a security’s price will move in a particular direction, or who are acting on impulse. Any research or due diligence is performed after the position has been opened and the individual decides to either hold or close the position. This is the opposite of the “investigate, then invest” approach to investment decision making.
Some investors may utilize this strategy to “test the waters” of a trade. If the position is profitable, they can add to it and potentially increase profits; if it is unprofitable, the position can be closed for a loss. Famous investor George Soros is known to invest first and investigate later to avoid missing rapidly changing market opportunities. Many investors would view this method of investing as gambling and prefer, instead, to investigate potential positions first and then risk money to test the theory (investigate, then invest).