Do you think a $2, $5 or $8 dollar stock is a cheap stock? Well, if your answer is yes, don’t worry, it is mistake that several people commit. We need to consider that when buying stocks, we are purchasing a piece of a company, a small slice of the company. And since companies do not have the same number of outstanding shares or earnings, you cannot decide whether it is cheap or not by considering only the share price.
Just as you cannot judge a good book by its cover, when determining if a stock is a good investment or... more
Have you ever noticed that at times the stock market depreciates as the end of the year approaches? This occurs because investors are getting rid of their losing positions in order to reduce the amount of taxes to be paid on their capital gains.
When you sell stock for a profit you will have to have pay capital gains taxes on it. The amount you will have to pay, in percentage terms, will depend on how long you have held onto the stock. If you kept it for a period greater than one year, you will have to pay long-term capital... more
If you are ready to enter the fascinating world of investing in the stock market then you will need to open a brokerage account. When you fill-in the application to open a brokerage account (which can be easily done online) you will need to indicate whether you want to open a cash account or a margin account. Let’s understand the difference between them.
If you are buying stocks through a cash account, then you are using the available cash in the account in order to take a long position in a stock. If you want to insert a buy order for... more
If you aren’t an experienced investor but just starting to approach the fascinating world of investing in the stock market, then probably short selling shares is not the appropriate way to start your journey as it involves a great amount of risk. This being said, to become a skilled investor, the more you read the better so let’s take a closer look at what short selling is all about.
What is short selling of shares
Short selling is the selling of stock shares that you don’t actually own. This is done through a margin account with your broker. Since you did not... more
If you are new to the world of investing in the stock market, then this article will teach you how to read and interpret stock quotes.
The two main components of stock quotes are the ask price and the bid price. The ask price and the bid price are how people participating in the stock market negotiate and communicate. When they match, then a trade takes place. Depending on which position you are taking within the trade (buying or selling) then you should match the asking price or buying price if you want to be... more
Companies that have cash available can either decide to pay dividends out to the shareholders, buy back company stock, or acquire another company. This depends on the nature and business model of the company. Acquisitions can be used to fuel the growth of the company and gain access to new products, IPs and new markets or simply strengthen the competitive position within existing markets. Provided that the acquisition is completed at a reasonable price and the integration goes smooth, it might turn out as a great ROI opportunity for the shareholders. If the... more
When buying stocks at predetermined time intervals and set dollar amounts you are performing dollar cost averaging which is one of the keys to becoming a successful investor and earning potential higher returns. Dollar cost averaging will help reduce the amount of market risk your are exposed to so if you are not already using this technique, make sure to set up a plan aligned with your investment objective.
Dollar cost averaging example
If for example you would like to invest $10,000 in the stock market (in individual stocks, mutual funds or index funds), rather than investing the entire... more
If you are new to the world of investing and are asking yourself exactly what are stocks and shares then this article should help you get started. Within the stock market world, the terms stocks and shares are used interchangeably and have the same meaning. For example, owning shares of Apple or owning Apple stock denote the same thing. Shares and stocks are also referred to as equity.
The role of stocks
A company issues shares in order to raise capital. Investors who purchase company shares are buying ownership in that company. Investors buy shares of a company to share the potential... more
Although this website is dedicated to buying stocks and bonds, it is important to have an understanding of the different investment possibilities in order to make the choice that best fits your goals, personality and the level of risk you are willing to take. In this article we will briefly describe the most common types of investments.
Most common types of investments
The two main investment categories are securities and property. When you invest in securities, you are investing in debt, ownership or the legal right to buy or sell an ownership.
The most common type of investment in... more
The stock market should be seen as a path to lifetime success rather than instant success. In order to be a successful investor you must understand what is realistic and what isn’t and most of all, make time your most valuable asset rather than wasting it.
Market timing does not guarantee a higher return on your investments in fact it usually reduces your return due to market timing errors and the associated higher trading costs. Depending on the time you have available and the level of personal interest you have in this subject, you can either make investing as simple or... more
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