If you are Young,Have time in your life you would want invest in some money to get returns that make your life better and comfortable.Off Course,Some of us have a much different definition of Comfort.For instance ,for some it may be moving around in Limousine,partying all night.Having personal Chef with a long long dinner table etc etc... Value Investing Values investing is a long term investment in which you seek to invest money so that you could reap its long term benefits. 4 thing to take a look at while Investing _ The most important qualities every good investment possesses New investors are often interested in purchasing a company's stock but don't know what to look for. What constitutes a good investment? Here are the four most important things you should require out of each of your holdings. 1. What is the "entire" company selling for? When doing research, it is important that you look at more than just the current share price - you need to find out what the entire business is selling for. The "cost" of acquiring the entire corporation is called market capitalization (or market cap for short) and is frequently referred to by financial professionals. One of the best examples of how this can keep you from overpaying for a stock is the eBay vs. General Motors case. At one point during the Internet boom, eBay had the same market cap as the entire General Motors Corporation. To put that into perspective, in fiscal 2000, General Motors made $3.96 billion dollars in profit, while eBay made only $48.3 million. Yet were you to buy either one, you would have had to pay the same amount. It is almost unbelievable that any sane investor would pay the same price for both companies - but the general public was seduced by visions of quick profits and easy cash. One tool that will help you discover how much you are really paying for a company is the Price to Earnings Ratio. It provides a valuable standard of comparison by which you can compare your possible investment options. 2. Is the company buying back shares? One of the most important keys to investing is that "overall growth is not as important as growth-per-share." A company could have the same profit, sales, and revenue for five consecutive years, but create large returns for an investor if the amount of available shares is reduced. To put it into simpler terms, think of your investment like a large pizza. Each slice represents one share of stock. Would you rather have part of a pizza that was cut into ten slices or one that was cut into eight slices? The pizza that was only cut into eight parts will have bigger slices with more cheese and toppings. The same principle is true in business. A shareholder should desire a management that has an active policy of reducing the amount of shares, thus making each investor's stake in the company bigger. When the corporate "pie" is cut into smaller pieces, instead of cheese and toppings, each investor gets a bigger cut of the profits, assets, and revenues. This principle is the foundation for the belief that when a company's stock is selling on the market for less than it is worth, the best investment any corporation can make is in itself. _ 3. What are your reasons for investing in the company? Before you purchase your first share of a company, you need to ask yourself why you are interested in investing in that particular stock. It is dangerous to fall in love with a corporation and buy it solely because you have a nostalgia for it - after all, the best company in the world is a lousy investment if you pay too much for it. Make sure the fundamentals of the company [current price, profits, good management, etc.] are the only reason you are investing. Anything else is based upon your emotions, which are detrimental in the financial world. You have to remove your feelings completely from the equation of selecting your investments, otherwise you will be unable to make rational decisions. 4. Would you be willing to own the stock for the next five years? If you aren't willing to buy shares in a company and completely forget about them for the next five years, you really have no business owning those shares at all. The simple [but painful] truth of this is evident on Wall Street everyday. Professional Money Managers attempt to beat the Dow Jones Industrial Average, which is a collection of 30 largely unmanaged stocks. Year after year, they fail to do this. It seems impossible that a portfolio managed by the best minds in finance can't beat a portfolio managed by no minds at all. The guaranteed way to success has historically been to pick a great company, pay as little as possible for it, and then leave it alone, reinvesting the dividends. Anything else requires a lot of time, energy, and risk tolerance that you may not have. _(this was by joshua from About network) The person who mastered the art of INvesting was Graham.Graham had his wonderful philosophies of investing.Influenced by his Mentor Warren joined under his guidance the Stock kingdom.But thats when Warren realize the problem with Graham.Graham often invested in business taking in term Intrinsic value of share,how ever as soon as the intrinsic valu was reached he sold them.thus Graham wasnt looking at long term investments.However Warren realized that companies which have excellent managment practices,will never Reach intrinsic valu and thus he always held on to his investments. How to Think About Share Price(Taken from Joshuas Texts) _ Share Price and Investing Decisions If you had $1,000 to invest, and were given the choice between buying 100 shares of company ABC at $10 per share, or 5 shares of company XYZ at $125, which would you choose? Many investors would go for the one hundred shares of ABC because the share price is lower. "The $10 stock looks cheap," they argue, "the $125 per share price for the other stock is too risky and rich for my taste." If you agree with this reasoning, you're in for a shock. The truth is, you don't have enough information to determine which stock should be purchased based on share price alone. You may find, after careful analysis, the $125 stock is cheaper than the $10 stock! How? Let's take a closer look. Share Price and Stock Splits - The Coca-Cola Example Every share of stock in your portfolio represents a fractional ownership in a business. In 2001, Coca-Cola earned $3.696 billion in profit. The soft drink giant had approximately 2.5 billion shares outstanding. This means that each of those shares represents ownership of 1/2,500,000,000 of the business [or 0.0000000004%] and entitles you to $1.48 of the profits [$3.696 profit divided by 2.5 billion shares = $1.48 per share]. Let's say the company's share price is currently $50. If Coca-Cola's board of directors thinks that $50 per share is close to the intrinsic value of the company's stock, but it's getting a little too pricey for average investors to be able to afford shares, they can announce a stock split. There are many kinds of stock splits, the most common being the 2 for 1. If Coke announced a 2-1 stock split, the company would double the amount of shares outstanding [in this case the number of shares would increase to 5 billion from 2.5 billion]. The company would issue one share for each share an investor already owned, cutting the share price in half [i.e., if you had 100 shares at $50 in your portfolio on Monday, after the split, you would have 200 shares at $25 a piece.] Each of the shares is now only worth 1/5,000,000,000 of the company, or 0.0000000002%. Due to the fact that each share now represents half of the ownership it did before the split, it is only entitled to half the profits, or $0.74. This should prove it is pointless to wait for a stock split before buying the shares of a company. Which is better - paying $50 for the right to $1.48 in earnings, or paying $25 for the right to $0.74 in earnings? Neither! In the end, the investor comes out exactly the same. The effect is sort of like a man with a $100 bill asking for two $50's. Although it now looks like he has more money, his economic reality hasn't changed. Share Price Relative to Value This all serves to make one very important point: The share price by itself means nothing. It is the share price in relation to earnings and net assets that determines if a stock is over or undervalued. Let's assume company ABC, at $10 per share, had EPS of $0.15. Company XYZ, on the other hand, earned $35 per share compared to its $125 price tag. In ABC's case, you are paying just under 67x earnings [$10 per share divided by $0.15 EPS = 66.67]. In XYZ's case, you are paying 3.57x earnings [$125 per share divided by $35 EPS = 3.57]. In other words, you are paying $66.67 for every $1 in earnings from company ABC, while company XYZ is offering you the same $1 in earnings for only $3.57. Assuming both company's earnings have been stable for many years, you would get much richer by investing in the $125 XYZ stock. Going one step further, unless ABC had a really high growth rate to justify the lofty p/e ratio of 66.67, it is dramatically overvalued and will probably fall sometime in the future. Some companies have a policy of never splitting their shares, giving the share price the appearance of gross overvaluation to less-informed investors. The Washington Post, for example, has recently traded between $500 and $700 per share with EPS of over $22. Berkshire Hathaway has traded as high as $70,000 per share with EPS of over $2,000 per share. Hence, Berkshire Hathaway, if it fell to $45,000 per share, may be a far better buy than Wal-Mart at $70 per share. Share price is all relative. _ In the end this topic is quite difficult to grasp at once,But if researched and understood thoroughly it gives benefits.Couple of months ago we Invested in a group and My My we werent let down by it. Disclaimer : Some of the material is written by me and some has been taken from ABout Netwrok and from Joshua Kennon's Text.I dont intend to use this article for commercial purpose.However I feel these texts should be passed on to the public in view of Economic interests.I would recommend My opinions as Base opinions nor would i gaurantee success as there is a lot to be understood before Actually investing powerfully to become OUtrageously rich.After all that is a dream isnt it? for all? Please Register or Log in to view the hidden image! Thanks. bye!
Take a look at these Useful Sites for More details on Investment Education: http://beginnersinvest.about.com/ www.tradingforbeginners.com/ www.free-financial-advice.net/investing-beginners.html financialplan.about.com/cs/beginnerinvestors www.fool.com/School/Basics/InvestingBasics.htm www.investing-for-beginner.net/ www.rogueinvestor.com http://www.wallstreetbaloney.com www.berkshirehathaway.com/letters/letters.html (MOST IMPORTANT) www.surferess.com/CEO/html/warren_buffet.html (Incase you wanna know how Warren used his Value Investing to Become 2nd Most Rich in World and A genious Investor in his own right) Apart from these links I would recommend reading some Books Especially: Buffetology By Mary Buffet and David Clarke Invest:Warren Buffet Way If you are interested You can ask.I am here off course. bye!
Real Estate is one of the best ways to invest. You have real property that you can always sell. The other investments can either go bankrupt, lose profits, or the stocks could collapse at any time.
I'd think it was to have ppl invest in the stock market if I read it correctly. I put in another way to invest that , IMO, is a little bit safer than stocks.
I agree with cosmictraveler, for a different reason. Most people can forego value investing, because most anybody who hasn’t paid off a house has a better way to invest their money. The #1 rule in investing is to invest in descending order of return/risk. So you shouldn’t invest in the stock market outside of a tax-deferred fund until a house is paid off, because an investment in the house returns 5% (nowadays, more in past years) risk-free and without capital gains taxes (even if the house plummeted in value, you’d still make 5%, which comes from interest savings; the 5% return has nothing to do with the house value), whereas the stock market averages 7.5% but with substantial risk (in some decades you might make nothing or even lose money) and with capital gains taxes payable. A risk-free tax-free return of 5% is better than a 7.5% risky taxable return.
Zion, Thank you for posting this information as it helps me understand the stock market a little bit better. Do you think ebay is a good company to invest in? All the stock brokers had been telling my dad to invest in Ebay. It seems to have a great handle on their market, despite frivilous law suits.
hi, The problem with InfoTech or DOT COM share holding is the return on investment.Let us assume that you have ABC.COM a group that you would like to own.To do that,you must understand the basic Business processes that go on in EBAY.Certain factors as i stated above do hold,but the problem is Maintainence in DOT COM groups.If say you today Invest in the group,the important question to ask is,If you Re-invest in the same company(OR ALLOW DIVIDENDS TO BE INVESTED)will the company use that to expand its own reach or will it use the money to update its current systems.In most cases the money is eaten up in maintainence and other operations required for the upgradation.Therefore Warren recommends to avoid Info shares.See,investing in a group should be a long term investment,therefore first you must decide which businesses you want to own.Then you must understand the mechanics of the business.heres a ten pointer that your DAD must read before he does anything: Take for example today i want to buy a group called Gannett Corporation,the Washington POst company.You could follow a general guidelines as i give for value investing: do your own Sherlock work find out what is the condition of company.Find out who publishes the newspaper and is it publicly traded? Consumer Monopoly? Does the group have identifiable consumer monopoly?you could investigate that by going to a newstand,and ask yourself or the keeper that which is the newspaper that he cannot do without?In case of DOT COM you could ask this question,but the answers you find are variable.There are so many bidding sites on the internet today and company faces immense competition.(ALTHOUGH I RECOMMEND BUYING MSFT CORP SHARES,SINCE IT THE LARGEST CONSUMER MONOPOLY IN WORLD!) Do you understand the mechanics of the business? You could ask that to yourself.Do you understand how things are done in the EBAY?Do you Know business you are going to own? Is the company Conservatively Financed? Think about the debts and its earning.Will company be able to pay off its debts as soon as possible? Are the Earnings of Company Strong and Show Upward Trends? EPS is an important measure in doing this.EBAY satisfies this i think. Does company buy back its own shares? This is a sign that mgmt utilizes capital to increase shareholder value when it is possible. How Retained or Re-Invested Earnings are spent? ROE? is company free to adjust prices to inflation? do operations require large capital expenditures? Ebay Fails this test. Initial Rate of return and relative value to Govt Bonds? Heres where the real test is.If you find that rate of retun is much less than a govt Bond,then it is better to but a bond than Stock in some group.For Warren above 20% is the criteria to buy the stock. Compounding The magic of Compunding is real.A simple concept can reduce a lot of TAX paying.This is especially true for warren. NOTE:this is a text written by ME.Zion. If you want to use it somewhere please give my reference. thanks. bye!
PS: Dont listen too much to Stock Brokers.They want to earn easy bucks away.Becoming a millionaire does take time.A millionaire of one night remains Millionaire of one night Please Register or Log in to view the hidden image!. Believe it or not,By following the Value investing strategies my father has earned a lot of profit.Even myself.I invested in Coke couple of years back and i have held on to it.I would recommend investing in Consumer Monopoly!.Also Remember,If you or your Dad find that price of a share is high and you invest in it because it is a great company,you couldnt more wrong.Always Buy with Least Price.Give Less Get more is the principle. For instance you get 1.00$ for each share you own as Dividend for some ABC company.Now your father decides to buy shares of the same company that you invested in with higher share price,His return as it turns out will be 1.00$ a share which is less for him since the share price for was more.So until a company has a sort of mgmt that it could also increase its profit with retained earnings,so that when intrinsic value of group rises(share prices rises) they will be able to maintain or increase EPS ratios. Ask more. Thanks. bye!
Thanks for the info. I do appreciate it as stocks have fascinated me for some time. Now I assume you know a lot about options. My fiance owns stock options in her company that she works for. Some are vested(I believe that is the term) at $.35 and some at $2.35 and some at like $15 a share. The stock symbol is SVVS. How do options work. When is the best time to maximize profit on these options? At one time, Savvis was at $21 a share.
Heres a Piece to Take a Look at: http://www2.coca-cola.com/investors/annualreport/2002/highlights.htm http://www2.coca-cola.com/investors/annualreport/2002/shareowner.htm bye!
i"LL JUST GET BACK TO YOU. In the meantime check this site http://www.optionsnewsletter.com/ oh! and dont forget to check out the ticker on the site rotating below.Almost every DotCom and InfoTech Or Comp related Stock is down except for msft and RedHat. bye!
Hi, check these out : http://www.optiontactics.com/freeoptionsintro.htm My goal is to give you a basic understanding of what stock options are all about without hopelessly confusing you with unnecessary details. I have read dozens of books on stock options, and even my eyes start glazing over shortly into most of them. Let's see how simple we can make it. Basic Call Option Definition Buying a call option gives you the right (but not the obligation) to purchase 100 shares of a company's stock at a certain price (called the strike price) from the date of purchase until the third Friday of a specific month (called the expiration date). People buy calls because they hope the stock will go up, and they will make a profit, either by selling the calls at a higher price, or by exercising their option (i.e., buy the shares at the strike price at a point when the market price is higher). Basic Put Option Definition Buying a put option gives you the right (but not the obligation) to sell 100 shares of a company's stock at a certain price (called the strike price) from the date of purchase until the third Friday of a specific month (called the expiration date). People buy puts, because they hope the stock will go down, and they will make a profit, either by selling the puts at a higher price, or by exercising their option (i.e., forcing the seller of the call to buy your stock at the strike price at a time when the market price is lower). Both put and call options are quoted in dollar terms (e.g. $3.50), but they actually cost 100 times the quoted amount (e.g., $350.00), plus an average of $1.50 commission (charged by my discount broker - commissions charged by other brokers are considerably higher). Call options are a way of leveraging your money. You are able to participate in any upward moves of a stock without having to put up all the money to buy the stock. However, if the stock does not go up in price, the option buyer may lose 100% of his/her investment. For this reason, options are considered to be risky investments. On the other hand, options can be used to considerably reduce risk. Most of the time, this involves selling rather than buying the options. Terry's Tips describes several ways to reduce financial risk by selling options. Since most stock markets go up over time, and most people invest in stock because they hope prices will rise, there is more interest and activity in call options than there is in put options. From this point on, if I use the term "option" without qualifying whether it is a put or a call option, I am referring to a call option. <p class="subheader">Real World Example</p> <p class="content">Here are some call option prices for a hypothetical XYZ company on February 1, 2003:</p> <p class="content">Price of stock: $45.00</p> <table border="1" cellspacing="2" cellpadding="2" bordercolor="#000000"> <tr class="content"> <td align="center" nowrap> </td> <td align="center" nowrap> </td> <td align="center" nowrap>Expiration Date</td> <td align="center" nowrap> </td> <td align="center" nowrap> </td> </tr> <tr class="content"> <td align="center" nowrap>Strike Price</td> <td align="center" nowrap>Feb '03</td> <td align="center" nowrap>Mar '03</td> <td align="center" nowrap>Jan '05</td> <td align="center" nowrap>Terminology of Option</td> </tr> <tr> <td align="center" nowrap> </td> <td align="center" nowrap> </td> <td align="center" nowrap>(price of call option)</td> <td align="center" nowrap> </td> <td align="center" nowrap> </td> </tr> <tr> <td align="center" nowrap>$40</td> <td align="center" nowrap>$5 ½</td> <td align="center" nowrap>$7</td> <td align="center" nowrap>$18 ½</td> <td align="center" nowrap>"in-the-money" (strike price is <u>less than</u> stock price)</td> </tr> <tr> <td align="center" nowrap>$45</td> <td align="center" nowrap>2</td> <td align="center" nowrap>4</td> <td align="center" nowrap>16</td> <td align="center" nowrap>"at-the-money" (strike price is <u>equal to</u> stock price)</td> </tr> <tr> <td align="center" nowrap>$50</td> <td align="center" nowrap>½</td> <td align="center" nowrap>1</td> <td align="center" nowrap>14</td> <td align="center" nowrap>"out-of-the-money" (strike price is <u>greater than</u> stock price)</td> </tr> </table> <p class="content">The <u>premium</u> is the <u>price</u> a call option buyer pays for the right to be able to buy 100 shares of a stock without actually having to shell out the money the stock would cost. The greater the time period of the option, the greater the premium.</p> (take from :http://www.terrystips.com/home.shtml?c1=testing&source=ls) This site is a must check out for tips. bye!
