Monday, June 18, 2012

A one-page Starter to Stock Market Investing

A Starter to Stock Market Investing

There are 2 sides to look at stocks and eventually invest your hard-earned money in it, hoping for a return.

Definition (1 sentence)
Fundamentals
~ What’s the business value vs. current price worth?
Technicals
~ charting & reading of past price, volume to forecast price movement
Tools to use…
~ Net Asset Value / Net Tangible Assets
~ Earnings Per Share (what company gets)
~ Dividends Per Share (what shareholders get)
~ Company Management  & its policies
~ Types of Industries (rising, shrinking?)
~ Prospects of business…

The aspects that make a business good (to buy)
~ Trend-following indicators, eg. Moving Averages, MACD to identify trends
~ Oscillators indicators, eg. Stochastic, Force Index, Relative Strength Index (RSI) to identify reversals
~ Trend lines, resistances & supports levels to estimate possible buy/sell points…

The aspects that make it a good time to buy/sell
Examples…
Suppose you have some money, you want to make the money work to return you more money, and a business’s purpose is to earn money, what kind of business is good to buy?

Would you spend $ 1 million to buy a business that has accounting net assets of $2 million?

Would you want a business that pays you $1000 each day or lose $1000 each day?




Buy low, sell high (or sell high, buy low)
Buy at A, sell at B… Buy or sell at C?


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