8/3/2019 Analyze Your Stocks and Double Your Profit
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Title:
Analyze Your Stocks And Double Your Profit
Word Count:
536
Summary:
An investor buys a share of stock by resorting to various
approaches that validate his investment by reaping
rich profits. Before investing, however, it is necessary for a
value investor to study the financials of a
business, so that the stock he buys at the companys intrinsic
value promises a greater return at its
liquidation value (the value of a company if all its assets were
sold). A typical investor would buy growth
stocks that have an upward trend, and seem likely to k...
Keywords:
stocks, shares, profit, eps, funds, increase, market, eps,
equity, investment, retire, bull
Article Body:
An investor buys a share of stock by resorting to various
approaches that validate his investment by reaping
rich profits. Before investing, however, it is necessary for a
value investor to study the financials of a
business, so that the stock he buys at the companys intrinsic
value promises a greater return at its
liquidation value (the value of a company if all its assets were
sold). A typical investor would buy growthstocks that have an
upward trend, and seem likely to keep growing for a long time.
Whereas, a technical
investor (also known as a Quant) makes decisions based upon the
psychology of the market and related
factors, which involve much higher risk but may prove to be more
profitable, or, can conversely result in
much greater losses. The fundamental analysis of any business
can depend on various factors: efficient
market theory, value and growth, growth at a reasonable price
and the quality of the business.
1. Efficient market theory pertains to stocks being always
correctly priced, as all the requisite information is
available on the current price.2. The stock market sets up the
price.
3. Analysts decide upon the value of a company based on the
potential for its growth.
4. Price and value may not be equal, due to certain
irrationalities governing the market.
Value investors need to rely on certain stringent rules
governing the nature of the stock which adhere to the
following criteria:
1. Earnings: company earnings are profits after taxes and
interests.
2. Earnings per share (EPS): the amount of recorded income (on
per share basis) available to the company to
pay dividends to stockholders, or to reinvest in itself.
