Basics of Successful Equity Investing
Investors who are looking to take the plunge into the equity markets now that the economy is starting to recover will need to follow these basics if they are looking to make wise equity investment choices.
1. What is the Price-to-Earnings Ratio for the security in question? Finding out what the PE ratio for a security is allows investors to determine how much revenue each dollar they invest generates for the company. Obviously, the lower the PE ratio, the cheaper the stock price. This ratio can be used to determine how expensive a stock price is relative to comparable securities.
2. What is the Debt-to-Equity ratio? The debt-to-equity ratio tells investors how much debt the company holds for every dollar in equity. The higher the debt-to-equity ratio, the more debt the company has, and this can be problematic. Understanding where comparable securities stands with their debt-to-equity ratio can help investors determine whether their security is better positioned to survive leaner times than its competitors.
3. Find out what Professional Analysts feel about the stock in question. Since most public companies are reviewed by investment houses for possible inclusion in their own portfolio, these companies will often publicize their recommendations. These recommendations will vary, but will be either Buy, Hold or Sell. Finding out what the pros think about a particular security can provide further confirmation of a position that an investor is looking to take.
These three tips are starting points for many investors. Although the list is nowhere near being all-inclusive, investors who take the time to find this easily available information will find they are making smarter trades over the long-term.
For investors who prefer to skip the numbers-heavy research aspect of proper investment management, mutual funds provide an attractive alternative, as all financial research is done by the fund company. - 23208
1. What is the Price-to-Earnings Ratio for the security in question? Finding out what the PE ratio for a security is allows investors to determine how much revenue each dollar they invest generates for the company. Obviously, the lower the PE ratio, the cheaper the stock price. This ratio can be used to determine how expensive a stock price is relative to comparable securities.
2. What is the Debt-to-Equity ratio? The debt-to-equity ratio tells investors how much debt the company holds for every dollar in equity. The higher the debt-to-equity ratio, the more debt the company has, and this can be problematic. Understanding where comparable securities stands with their debt-to-equity ratio can help investors determine whether their security is better positioned to survive leaner times than its competitors.
3. Find out what Professional Analysts feel about the stock in question. Since most public companies are reviewed by investment houses for possible inclusion in their own portfolio, these companies will often publicize their recommendations. These recommendations will vary, but will be either Buy, Hold or Sell. Finding out what the pros think about a particular security can provide further confirmation of a position that an investor is looking to take.
These three tips are starting points for many investors. Although the list is nowhere near being all-inclusive, investors who take the time to find this easily available information will find they are making smarter trades over the long-term.
For investors who prefer to skip the numbers-heavy research aspect of proper investment management, mutual funds provide an attractive alternative, as all financial research is done by the fund company. - 23208
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MutualFundSite.org is an informational website that shows people Where To Invest and also helps people Learn To Invest properly.
posted by X - Men @ 5:59 AM
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