Now that the economic data coming out in the press is starting to look brighter with each and every day, a lot of people may feel that now is the right time to start investing in equities. Trading successfully is never easy, but following these basics can certainly help.
1. Know the Price-to-Earnings Ratio for the security you are buying. The price-to-earnings ratio, or PE ratio, allows potential investors to see how expensive one security is compared to comparable securities. The PE ratio tells an investor what price he or she will pay for each dollar that the company generates in revenue. Therefore, the lower the PE ratio, the better the bargain.
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.
The tips noted here are nowhere near complete and exhaustive. However, investors who take the time to dig deeper by understanding these key areas and why the numbers or recommendations are as they are will find their trading success improve almost instantly.
As an alternative, investors who prefer a hands-off approach to their investment accounts should consider mutual funds. This puts the onus of proper research on the shoulders of the mutual fund company and not the investor. - 31876
1. Know the Price-to-Earnings Ratio for the security you are buying. The price-to-earnings ratio, or PE ratio, allows potential investors to see how expensive one security is compared to comparable securities. The PE ratio tells an investor what price he or she will pay for each dollar that the company generates in revenue. Therefore, the lower the PE ratio, the better the bargain.
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.
The tips noted here are nowhere near complete and exhaustive. However, investors who take the time to dig deeper by understanding these key areas and why the numbers or recommendations are as they are will find their trading success improve almost instantly.
As an alternative, investors who prefer a hands-off approach to their investment accounts should consider mutual funds. This puts the onus of proper research on the shoulders of the mutual fund company and not the investor. - 31876
About the Author:
Learn more about Where To Invest and the best Bond Funds at Christopher Fitch's website, the Mutual Fund Site.org.
