posted by on Jul 21
The fifth and final part of this series deals with the profit margin, which is traditionally an undervalued concept in finance today. Profit margin is something that many shareholders are concerned about when going through the books of their company and they always urge directors to improve profit margins. But why do they do this?
Before answering this question, I will outline what a profit margin actually means just in case some people are not aware of the concept. Profit margins are obtained by dividing net income by net sales. This essentially shows what percentage of net sales becomes net income after taking into account expenses (including tax).
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posted by on Jul 7
The fourth part of this series deals with the debt/equity ratio, which is another key component of Warren Buffett’s legendary methodology. In fact, it is a component that the man himself treats very carefully when deciding which stocks to invest in. Just like the return on equity in the previous part of this series, it is an equation that is commonly used in finance, however, Buffett is the one who makes the most and greatest use of it.
The components that make up the debt/equity ratio are fairly obvious and I’m certain that many people first heard of it in high school in a commerce or business class. But just in case, there’s still some confusion, I will give a quick, brief explanation. The debt/equity ratio is given by total liabilities of a company divided by shareholders’ equity.
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posted by on Jul 3
This third part of this series focuses on another important element of Warren Buffett’s hugely successful methodology – return on equity (ROE). Now, you may have heard the term “return on equity” before. It’s not a relatively new concept, and it is one that is commonly used in finance. However, its importance must not be taken for granted.
It’s one thing to know what “return on equity” is, while it’s another thing to know how to use it to a hugely positive effect. In other words, Warren Buffett uses a tool that is used by basically everyone in the industry, however, he uses it in a way that no one else does, and this is the lesson that all investors should learn from.
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posted by on Jun 25
This second part of this series on Value Investing will focus on another important part of Warren Buffett’s methodology when it comes to picking the best stocks. But before I begin talking about this part of his methodology, I would like to remind you that this is not the only methodology available out there, there are countless others that one cannot ignore. However, you would be crazy not to study and clearly understand the methodology of arguably the most successful investor in history. So while I’m advocating that all budding investors that wish to be very successful should adopt Buffett’s methodology, I am also suggesting that you should not limit yourself to just this one methodology.
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posted by on Jun 24
Now I’m sure you’ve all heard people coin the term “Value Investing.” And that this is what many successful investors such as Warren Buffett have used in order to build immense fortunes. It must be good because one man has generated a fortune large enough to become the richest man on Earth. However, what I tend to find is that many people have different ways (and in many cases incorrect ways) of defining and explaining what value investing is. And if you have no idea what it is in the first place, then you will only more confused. For that reason, I have decided to clear the issue up in his article.
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posted by on Jun 19
Stock Market Trading Strategy - RSI Relative Strength Index
By Chris F Jones
Learn to trade using the RSI (Relative Strength Index) and see your trading profits increase. The RSI is one of the most used indicators available to traders. This little indicator can be used in several ways, and we will take a look at a few of them today. So, if you’re ready lets get started.
First off, I guess we should give a little background of this tool and credit to it’s developer. The Relative Strength Index was first introduced by J. Welles Wilder in the June 1978 issue of Commodities Magazine (it’s now called Futures Magazine), and then later, it was reintroduced in his book, New Concepts in Technical Trading. OK, I think that’s enough on the history, I don’t want to bore you. I just thought we should give credit where credit is due. Now, lets get on to good stuff, how can we make money using this handy little momentum indicator.
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posted by on Jun 12
The Art of Making Money in Stock Market
By Vijay Kumar Sharma
Most people know that the stock market is unpredictable. Losses in stock market investment are an inevitable part of the trading process. Therefore every stock market trader, howsoever shrewd and experienced he may be, is bound to incur a loss at one time or another.
So before you start trading in the stock market, you must be prepared to suffer losses like every other trader. This, however, does not mean that making money in stock market is more a matter of luck or chance.
This only means that you should make a thorough search, both fundamental and analytical, about the profitability of the stock before investing in it. Having done that you must be prepared to suffer loss since, as already said, the stock market always remains unpredictable.
You have to develop a mind set which should be prepared to take losses in your stride.
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posted by on Jun 8
Stock Market Strategies For Investors
By Joseph Kenny
Investors can use a number of strategies to invest in the stock market. To begin with, they need to analyze market trends, learn about the market in which the companies they are interested in operate, and purchase shares at an appropriate time.
Usually, good companies announce their profits, or their status in the market, at certain times of the year. The prices of their shares tend to increase before such announcements are made. Therefore, investors need to watch out for these periods, and not purchase shares at this time. In other words, it is important to wait for the right ‘Market Timing’ for trading in shares. Some basic stock market strategies for investors are listed below: -
Make a well-planned investment portfolio that satisfies a particular level of risk tolerance.
Keep reviewing and updating the investment portfolio to keep up with market trends.
The technical analysis of stocks helps in gaining better knowledge about a company: its profits, its market capitalization, and its future growth prospects. Equally important is to be able to understand and apply the quantitative measures of the stock market.
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