You’re investing in stocks — good for you! To make the most of your money and your choices, educate yourself on how to make stock investments confidently and intelligently, familiarize yourself with the Internet resources available to help you evaluate stocks, and find ways to protect precious metals investing for dummies money you earn.
Also, be sure to do your homework before you invest in any company’s stock. After all, stock investing is fun and frightening, sane and crazy-making, complicated and simple — and you may need reminders to stay focused. The primary reason you invest in a stock is because the company is making a profit and you want to participate in its long-term success. If you buy a stock when the company isn’t making a profit, you’re not investing — you’re speculating. A stock’s price is dependent on the company, which in turn is dependent on its environment, which includes its customer base, its industry, the general economy, and the political climate.
Your common sense and logic can be just as important in choosing a good stock as the advice of any investment expert. Why are you investing in stocks? Why are you investing in a particular stock? Even if your philosophy is to buy and hold for the long term, continue to monitor your stocks and consider selling them if they’re not appreciating or if general economic conditions have changed. Earnings: This number should be at least 10 percent higher than the year before.
Sales: This number should be higher than the year before. Debt: This number should be lower than or about the same as the year before. It should also be lower than the company’s assets. Equity: This number should be higher than the year before. For large cap stocks, the ratio should be under 20.