Dont Buy Stock before Reading
Stock simply means the share of ownership in a company’s assets, profits or earnings. Meaning when you buy and own a stock, then you own part of that company whose stock you bought. You now have a share in her assets and profits relating to the amount of the stocks which you have bought.
Be warned stock exchange can be risky. There is no guarantee on individual stocks in the stock market, when the stock goes bankrupt then your investment is worth zero.
Before buying Stock
A stock might look tempting at the moment but how will the stock look like in the next one or two years.
Will it keep appreciating? Your ability to predict the appreciation in the market performance of a stock is very important here.
Look out for the stock that is trading heavily at the moment. The quantity traded and value of shares.
Understanding the financial market and been able to interpret financial figures and tables/graphs.
Research, research and more research the market Capitalization of a company – It is the current share price multiplied by all outstanding shares. This gives you a general idea of the size of a company.
Price to Earnings Ratio : It is the price to earnings of a company’s current share price divided by its EPS. This amount will show you about what investors are willing to pay per dollar of earnings. It can also be used as a metric to determine how much a company is over or undervalued.
Growth stock – The basic idea behind a growth stock is that you want to buy it when it’s not worth much and then sell it when it’s worth a lot. A growth stock investment strategy attempts to find companies that are already experiencing high growth and are expected to continue to do so into the foreseeable future.
Only invest money you willing to lose, don’t invest your life saving.
Analyse company financial statement. Check to see how well the company was doing in the recent past, this will give you an idea of how the future of a company will likely shape in few months.