Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
cintrix, so if this is the inverse. Is it still important to use it? Other words, if company A has a P/E ratio of 1 and company B has a P/E ratio of 2. Is it possible that company B has a lower earnings yield then company A? Since the lower the P/E ratio, the higher the earnings yield?
The earnings yield (aka earnings-price ratio, E/P ratio) for stocks is the inverse of the price-earnings ratio (P/E) of stocks, and is equal to the earnings per share of common stock divided by the market price of the stock.
http://thismatter.com/money/stocks/valuation/earnings-yield.htm
if the fundamental sites don't give the ratio you may have to figure it out yourself
That depends on the terms of the buyout agreement.. It all depends on what deal was made between the acquiring company and the acquired one and must be approved by the majority of stockholders.
What happens if a company that you own stock in gets bought out?
For example I own 54000 shares of company A at 1$ a piece
Company A gets bought by company B which is trading for 3$ a piece.
What happened since to my shares?
cixtrix, I found what I believe three value stocks that I'm digging deeper in. Berkshire Hathaway Inc. (BRK-B), Sony Corp. (SNE) and Met Life Inc. (MET). I'm using the tool you gave me, by using Yahoo Finance to look up most of the information (which has been a big help). I'm now looking for the earnings yield. Though I can't find it in the "Key Statistics". Is there another word or abv. for earnings yield?
cixtrix, very good read. I have been busy with school, so I haven't been able to look at the key statistics for the list of companies I wrote down. Though the first thing on my list is to find a few companies that's trading %30 under book value per share. Afterwards I plan to look at other factors including P/E ratio, earnings yield, insiders, current ratio, expenses, revenue, profitability, comparing to industry and dilation. Seeing which looks the best out of the three.
There was a time when only Canadian brokers allowed shorting pennies.
Too late. I already picked them up. Most of them were written from 2011 to 2013. The library is still generally behind the times. Also, I am going to highlight the crap out of these books for my second info extract read.
Thanks for clearing that up. Now, the baffling part is how some brokerages allow penny stocks to be shorted and others don't.
Libraries are for poor people who can't afford E readers or someone who just likes paper books and the hot librarian that works at said library :)
Who goes to the library anymore? I use the virtual library. They download any book to my kindle for a certain amount of time the same way you borrow a book. Now they have a new service where they allow you to download three songs per month. Not sure how that is legal but it is the public library allowing it .
Before you go out and buy those books go to your local library and borrow them for free
Yes, they are related. You can't short a stock if you don't have a margin account. When you short a stock the brokerage needs collateral because you are borrowing shares and they are giving you the proceeds from those shares you don't own.
In order to short a stock, do you have to buy it on margin or is shorting and margin not necessarily related?
I am trying to figure out how to short through eTrade.
I am lazy compared to you. I could never spend the time you have n the past few days trying figure out formulas. lol Just wanted to add...There are loads of companies that trade over book value. You have to remember that book value is a very conservative number and doesn't always represent the real value. And then when you find a company that is trading well below book value you have to wonder why it is. Why would a company be so undervalued?
Value Play or Value Trap?
If it's obvious that a company is trading for less than its book value, you have to ask yourself why other investors haven't noticed and pushed the price back to book value or even higher. The P/B ratio is an easy calculation, and it's published in stock summaries on any major stock research website. The answer could be that the market is unfairly battering the company, but it's equally probable that the stated book value does not represent the real value of the assets. Companies account for their assets in different ways in different industries, and sometimes even within the same industry. This muddles book value, creating as many value traps as value opportunities. (Find out how to avoid getting sucked in by a deceiving bargain stock in Value Traps: Bargain Hunters Beware!)
cixtrix, this is perfect! Of course your not lazy. Work smarter, not harder. If I have any further questions I'll be sure to ask, thanks!
Very nice! Thanks for that info.
You can actually access some of that online - for example:
http://www.dummies.com/how-to/content/comparing-book-value-and-book-value-per-share.html
For Dummies Investing Books: don't sleep on them!.
I have read the following For Dummies books recently:
1. Trading
2. Investing Online
3. Technical Analysis
4. Fundamental Analysis
5. Currently reading Candlestick Charting
These books are written in such a straight forward manner. Very easy to understand and provide tons of additional resources.
After the first full read through, it is a good idea to go for a second spin to extract what you need to develop your investment / trading plan and paper trade. While some of the information briefly touch on another book's topic i.e. Trading talks a bit about Fundamental and Technical Analysis, the level at which these books break down some complex things in an easy to understand manner is great.
Highly recommended for the beginner.
Not to sound lazy, but I am. I never figure it out mathematically for myself. I just look it up. Why don't you look it up on sites that provide fundamental analysis? It is much quicker. There are so many sites that provide this information. You don't have to do the work. Here are a few - I plugged in VZ as an example:
http://finance.yahoo.com/q/ks?s=VZ+Key+Statistics
http://finviz.com/quote.ashx?t=VZ&ty=c&ta=1&p=d&b=1
http://www.gurufocus.com/financials/VZ
cintrix, I understand the difference now. Though something is wrong with the formula that I showed in my earlier post for finding book value. Using this formula shows all companies extremely overvalued. I found the formula from Investopedia. What am I doing wrong? I know it's not my math. It has something to do with what's included in the asset and liabilities figure. Something should be excluded. I've found other sites that don't include certain figures like tangible assets or long term debt. But all sources include and exclude different numbers. I don't know which source is correctly calculating book value. Understand where I'm coming from?
I sent that site a note regarding the wording of that line. I beleive they should have used the word "latter" and not "former" and I think this is why you are so confused. Here they say the opposite:
Investopedia explains 'Market Value'
1. In the context of securities, market value is often different from book value because the market takes into account future growth potential. Most investors who use fundamental analysis to pick stocks look at a company's market value and then determine whether or not the market value is adequate or if it's undervalued in comparison to it's book value, net assets or some other measure.
http://www.investopedia.com/terms/m/marketvalue.asp
I will let you know if they respond, but their two different explanations are contradictory imo.
I think you are thinking way too hard here. What you need to know is that market value is what the stock is trading at. A lot of the times a stock will trade over book value. Like for example, tsla,the price it is trading at is market value which is higher than its actual book value. If you really want to be a value investor you would want to find a stock that has a book value lower than where it is trading. Do a google search for "growth vs value" investing. You will find examples of how they differ.
cintrix, so if I understand correctly. Market value of equity doesn't take into account the company's growth potential? Sorry for being difficult.
http://www.investopedia.com/terms/m/market-value-of-equity.asp
Definition of 'Market Value Of Equity'
The total dollar market value of all of a company's outstanding shares. Market value of equity is calculated by multiplying the company's current stock price by its number of outstanding shares. A company's market value of equity is therefore always changing as these two input variables change. A company's market value of equity differs from its book value of equity because the former does not take into account the company's growth potential.
Investopedia explains 'Market Value Of Equity'
Market value of equity is basically a synonym for market capitalization. It is used to measure a company's size and helps investors to diversity their investments across companies of different sizes and different levels of risk.
cintrix, I meant value investor, not growth. Sorry for any confusion.
cintrix, as a growth investor. To make sure we are clear. I believe I'm looking for the PPS the stock should be trading at based on just it's net worth. For example...
Assets $100 - Liabilities $30 = Net Worth $70
If this company were to close down today, it would be worth $70.
Net Worth $70 / Outstanding Shares 5
This company is valued at $14 a share, but the current price per share is $7. Making this company under valued, by $7
Am I correct on this part? This is Market value?
So to follow up on your response. In this formula, I need to use long-term assets so I also need to use long-term liabilities. I have been using both long term numbers and haven't found an under valued stock.
Thanks I appreciate it.
Finally someon who knows
1. MM's are market makers, and yes, that is level II they are referring to. I don't use Ihub's level II service, I use Etrade's. Every trader has their own preferences when it comes to what level II service they are using. VND? Maybe you mean VNDM (VANDHAM SECURITIES CORP. ,NEW YORK NY ,212-223-7510)- they are a MM.
2.Yes, short term traders trade often and take quick profits. They aren't in it for dividends or long term. Daytraders will trade one stock within a one day period. Swingtraders will sometimes hold for a period of days. Position traders will hold even longer waiting for a particular event. But they are all shorter term traders.
3. Yes long term is usually for 1+ years.
Oh and on the triple zero stocks...they are triple zero for a reason. Yes, it is possible to make money on a run but they are few and far between. It does happen, but don't be investing in a triple zero company. They are usually diluted pos's and eventually reverse split.
Hello Cintrix
I am also farly new to the Trading. I just started trading penny
stocks like 2 month ago. I do a little research and the company looks good but for some reason it gets in the red just a day or two after I bought it (like you said happens sometimes).
When I see people in other boards talking about MMs ??
and VND ??
1.) Is this this the Level 2 Tab you have here on Investorshub.
2.) Short Term Trades are just a nomenclature for someone who tends to get out of a trade quick??
3.) Is Long term a term fro someone who tends to stay in for a long time??
Have you seen anyone make good money on these penny stocks recently? It seems like its hard to find a company that will
go from 0.0002 to at least a 0.01 easy.
In some of the boards I see comments from some that might have alot of experience talking about making $1000 and $20000 in one day. My question does someone need at least $5 to $10K to be able to do this?
Thanks pardon so many questions.
When you figure that one out, let me know! lol For me, exiting is way more difficult than picking what stock I want to buy. Timing is very difficult. Of course, if you are a very short term trader, your exit strategy is going to be totally different from a long term strategy. I am a short term trader and I find that I seem to sell way too early often, but I really beleive that is how I have stayed in this trading world so long. There is NOTHING worse than being up on a trade and then waiting too long and then being in the red.
That would be long term assets. I think you are confusing book value vs market value. Market value is based on current assets/liabilities.
I was wondering if someone could help me on the subject of book value? After using the formula on over 25 stocks. I realized that I may not be using the formula correctly. The formula was telling me all of the stocks were extremely overvalued. I believe problem might be factoring assets and liabilities.
I got this formula from Investopedia. The formula I have is...
(Assets) – (Liabilities) = (Net Worth)
(Net Worth) / (Shares Outstanding) = (Book Value)
It wasn't clear weather it should be current and/or long term assets and liabilities. I have been factoring both current and long term.
Thanks, Gulley
Now that I mostly understand a strategy for entering the market. I need to learn more about strategies exiting. I found this link to be a little helpful...
http://www.investopedia.com/articles/trading/04/092904.asp
Are there any more resources I can read about this that you think would be helpful?
IMHO:
Net current assets is current assets minus current liabilities. The "Net" in net current assets is why you deduct curr liab from curr assets.
Net curr assets is not the same as anything to do with book value - net curr assets is an indication of liquidity.
Check out this link for definitions
http://www.investopedia.com/dictionary/
Thanks, greatly appreciate that.
1. excluding stockholders equity
2. and 3. let me get someone else to explain it - I honestly haven't looked at fundamentals in years - I used to know the difference between all of them - I really don't look into this that much anymore so I don't want to be telling you the wrong thing
Well, I wasn't being honest with you cintrix. I wanted to keep this out of discussion, though I will explain. Soon will be the first stock I personally choose to invest in. I have only bought and sold one stock, which a friend recommended me. I was naive investor at the time. I bought into it with no clue about the business. When I wanted to learn more about not only the company, but the market itself. He told me not to worry and that I'll make a great return with the stock. We no longer communicated, more on his part. As to why, I don't know. Though an already long story short. I didn't know what an exit strategy was and sat on it longer then I should have. In the end I lost 80%. I do understand your first paragraph about blind investing. I learned my lesson, I'm putting it behind me and starting fresh on my own.
I would eventually like to learn all of the different strategies of investing. Though I'm a broke 21 year old college student, who isn't giving up on the market after my past experience. I barely have enough left where I'm forced to buy stock from one company, I can't diversify. At this point in time, I feel value investing is the best choice. It's basic, most simple for me at this point and it seems to hold the least amount risk of any other strategies.
I do have questions regarding the links you provided...
1.) When it comes to calculating book value or net current assets per share. One of the numbers needed is liabilities. Should I include shareholder's equity into the liabilities?
2.) Since book value is an inverse of earnings yield, is it important to look at earnings yield when comparing stocks or vise versa? Since their both coming from the same numbers.
3.) This question goes along with the question above. Net current assets per share seems to also be the inverse of book value?
I believe that's all the questions I have for now.
I thought I would buy a stock a few days after selling the first stock I held. Though I'm glad you're here to help with what you can. I feel more confident and I'm not even sure if I want to buy in next week. I want to come up with an exit strategy before making a move.
Once again, thank-you very much for replying cintrix,
Gulley
You know, most people don't pick what type of trader they are going to be. You don't just one day wake up and say "I think I want to be a value player." Most people who first start out will find a stock that they are interested in, invest in it, and learn about that stock. Hopefully for them they DON'T make a load of money on their first play. Why? Because that is, imo, the kiss of death. You are better off losing money in the beginning so you don't get cocky and have a false sense of "I am really good at this." After you begin trading and you have a bunch of trades under your belt you then will become familiarized with the different types of approaches.
When I first started out I was trading based on the growth stock theory of William O'Neil - his CAN SLIM strategy. This is because I would read Investors Business Daily religiously since because back in the dark ages we didn't have access to the information we have now on the internet. When I decided I wasn't interested in long term investing and wanted to trade short term I began trading based on news. Then I got into trading based on filings. I also did a lot of bk trading at one point too. I am now a bounce trader and have been for many years. I still will trade something based on a filing, news item, and bk play every now and then if something interesting comes out.
Once you begin trading actively you will figure out what type of strategy you like and works best for you! Just remember that you WILL lose money and to take your losses when they are still small.
Sorry for the slow reply. I wanted to be sure to read all of the links at once, instead of bits and pieces because of my horrible reading comprehension. Firstly, these links were very helpful. It seems to me this is the best, basic strategy for any beginning investor in my opinion. Then from there, your welcome to branch out. After reading, I have no current questions on this subject. Though I'm sure when I break it down, I might request further explaining. I'm realizing, more then ever before. That there are no set guidelines to picking a stock for everyone. For each strategy of investing, presents endless strategies for each individual. Now my current goal is to choose what personal guidelines I want when deciding the value of a stock and weather to buy or wait for a better time to buy.
Thank you cintrix very much for pointing me in the right direction.
that would be based on fundamentals - you would have to read up on what type of criteria you want - earnings, pe ratio, book value, etc.
Go here and then after you read it go to the links on the bottom of the page and read up:
http://www.investopedia.com/university/value-investing/value-investing3.asp
Table of Contents
Value Investing: Introduction
Value Investing: What Is Value Investing?
Value Investing: How Stocks Become Undervalued
Value Investing: Finding Undervalued Stocks
Value Investing: Finding Value In Financial Reports And Balance Sheets
Value Investing: Finding Value In Income Statements
Value Investing: Managing The Risks In Value Investing
Value Investing: Famous Value Investors
Value Investing: Couch Potato Value Investing
Value Investing: Common Alternatives To Value Investing
Value Investing: Conclusion
PR
So I came to the conclusion that I am a value investor. Though I'm confused about how investors find intrinsic value. Could you please offer any help on this subject?
Thanks for your response. Your advice is very helpful. I understand that you can't choose my strategy, I'm just looking for some guidance. You have helped me realize that there are many different strategies. So I have need to do some more reading. Hopefully learning more about different strategies will help me of what I specifically want to look for when picking a stock.
I don't have an exact answer for that. I find more thill in pennies due to the risk for high profits. Though the only benefit I see in big boards are dividend yields, which I find very attractive.
Ok, first off, you can have a thrill ride in the big boards too. There are plenty of volatile moves - look at tlsa, aapl, or unxl the past few days. Big board stocks are not just for divys.
I would like to be able to invest in either, but if I had to lean towards one. I would most likely say pennies.
Let me give you just a little advice about what you just said. Don't ever "invest" in penny stocks. If you want to trade them short term, fine, but don't invest. There are very few good penny companies. The really good ones are few and far between. Don't get caught up in a penny stock and start listening to what they are pumping on their boards. You will lose money if you do that.
I can't pick a strategy for you. This is something you will have to figure out for yourself. I personally am a bounce player. I like to trade big board stocks that are down a certain percentage for a quick bounce play. There are others who play news. They watch the news like hawks and jump on a stock the minute good news hits. Then there are technical traders who don't have a clue what the company does but they watch the charts for a technical move.
I can only offer advice that if you plan on trading pennies be very careful of the promoters, check the filing and watch how big the os is, and if they are diluting. It's a jungle out there.
I have never thought about that. I didn't come in to the market with a specific strategy of investing.
Are you big boards, pennies?
I don't have an exact answer for that. I find more thill in pennies due to the risk for high profits. Though the only benefit I see in big boards are dividend yields, which I find very attractive. I would like to be able to invest in either, but if I had to lean towards one. I would most likely say pennies.
Are you a value investor or are you looking at growth?
I had to look up the definitions for these terms. If I understood it correctly, a growth stock could be looked at as a new and growing company? Then a value stock would be a mature company that grows slowly, but pays dividends? If I understand correctly, I would most likely choose growth.
Are you long term or short term?
I think I would enjoy a stock that requires close attention, that would require me to see where the stock is at a few times throughout the day. I would say, short term and holding as long as a day, to as long as 3 months depending on the situation.
Do you think you could point me in the right direction about what kind of investor I am?
I greatly appreciate your help, thanks cintrix.
You have to decide on what type of investing you want to do. Are you big boards, pennies? Are you a value investor or are you looking at growth? Are you long term or short term? You have to narrow down what it is you are planning on doing.
Good morning all! I'm new to investing here. I have been trying to make a check list if you will, of things to look for when picking a stock to buy. After reading just about every article on the internet, I feel overwhelmed of the many indicators you can use to pick a stock. I think I could be trying to get too in depth too quickly, which has me on edge. Is there a basic list of indicators to go by, that would let me feel comfortable buying a stock while I build up my knowledge over time? Or is there a place you recommend I start for basics?
Thanks, Gulley
MIC, You're welcome.
| This board is for general questions regarding investing/trading. NO IHUB QUESTIONS OR COMPLAINTS! |
Questions relating to Ihub site - post here:
http://investorshub.advfn.com/boards/board.aspx?board_id=504
NO STOCK PICKS ON THIS BOARD!
Investors Hub does not endorse nor is it responsible for the content of the information posted on this message board. We have not independently reviewed the information, claims and testimonials provided within this message board and make no guarantee or warranty regarding such content. The information, opinions and recommendations expressed on this message board are not those of Investors Hub nor the Moderators. As always, please seek professional advice before investing in any marketable security and do your due diligence.
Volume | |
Day Range: | |
Bid Price | |
Ask Price | |
Last Trade Time: |