Annual general meetings play a role in stock market investing. You can find out more by checking out our detailed guide here.
Annual general meetings are one of the more complicated parts of investing in stocks. You go from staring at charts and numbers alone all day to suddenly being asked to participate in these big events with what can be thousands of other voters.
While some people ignore them, the benefits of AGMs are worth paying attention to. So without further delay, let’s discuss AGMs and how you can participate.
The Basics of Annual General Meetings
We’ll be frank: annual general meetings are boring (to most people, anyway). While the happenings at these meetings can be important, they’re also often predictable.
One of the more important things that happen at these meetings is the election of directors. These are the head honchos; the people who, together, have perhaps more control over a company than any other group or person.
These elections can be exciting but only if you take the time to do your research and there is any kind of choice to be had. If someone is guaranteed to win or lose by a landslide, you can vote, but it doesn’t really matter.
Another element to AGMs are declarations of a dividend or changes in a given dividend policy. (You can imagine how votes to pay out dividends to shareholders tend to go, prudent or not.)
A corporation’s annual report is also discussed at AGMs. There is an interesting element to report & accounts resolutions in that there is a vote to determine not policy change but shareholder satisfaction.
To simplify something with its own nuances, auditors will make claims about company accounts. Shareholders can then vote, not to change much (the company has approved and filed the information) but to agree or disagree with the claims.
Voting in the negative is rare in these cases but it does happen. If you believe a corporation is misrepresenting important facts, you can vote to say as much.
Finally, a company will discuss important projects and other activities. (There are more elements sometimes present at AGMs but we are focusing on the basics today).
Why It Helps to Care
As anyone interested in stock investing will be able to tell you, “boring” does not mean “unimportant.”
Listening to a bunch of powerful, rich people whose lives are so alien to yours that they may as well be another species may not seem fun. We admit, for most of you readers, it won’t be.
However, the things they’re discussing affect your investment. Moreover, not every decision being made has an inevitable conclusion.
For example, three directors of Manchester United, a huge soccer club corporation, were once voted out in a single AGM. The impact this had on the course of the company can’t be overstated.
It can seem like empty words to say “every vote matters” in a world where we realize how much influence powerful people can have on any kind of election. At the same time, it’s true.
When you vote at an AGM, you are voicing an opinion. Sometimes your opinion will impact what occurs, sometimes it won’t. At the very least, you can know that you tried if something goes south that you saw coming.
Which Way the Wind Blows
One of the interesting things about annual general meetings (at least if we stretch the word “interesting”) is that they help investors see the general vibe of a company.
The most obvious place this is true is regarding financial reports. In fact, these reports often have a dramatic effect on stock price, unless their results are about what people expected.
However, an AGM can also give you information even those at the meeting may not intend. For example, is the company announcing many projects? How do they compare to those they’ve committed to in the past?
By answering both those questions, you may be able to spot changes to corporate culture the company hasn’t overtly announced. In fact, the corporation may not fully realize they’ve evolved (for better or worse) in some cases.
It’s not mind reading and, yes, you have to be careful leaping to conclusions. But big, flashy plays after a history of safer ones says something. The opposite would happen as well.
Real Investing is About Research and Paying Attention
There’s value to listening to people you trust for some basic investing advice. We release such advice regularly; just take a look at these five stocks we think you should pay attention to.
At the same time, we hope you’re not investing thousands of dollars only because someone told you to. Important to investing is “due diligence,” in other words, putting in the time to make sure you’re investing smartly.
AGMs aren’t the only way to perform due diligence, but they can play a key part. They’re also not frequent; they’re annual.
If you don’t want to pay attention to every corporation you’ve invested in’s AGMs, then at least watch your biggest investments. The way those meetings go affects your money. So care!
More Advice Where This Came From
That covers the basics of annual general meetings. Generally boring, generally important. We recommend you try to care at least a little.
Putting in a little work can put you miles ahead of the average investor. The truth is, most people in the market are kind of lazy and make rash choices. That doesn’t mean you have to.
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