Since we're all starting out, if we learn anything new or something "clicks," we can share it. So everyone here can learn from the light bulb that just went off in our heads.This morning I learned about the beta coefficient. It is a rating of how risky a stock is. Basically, a beta of 1 is average; above 1 gets riskier; and below one is not-so-risky.
interesting, how is it calculated?
Good question. I have no idea, but am willing to do the research to find out. As soon as I figure that out, I'll let you know.Otherwise it is listed on Yahoo Finance under the "key statistics" heading.
http://en.wikipedia.org/wiki/Beta_coefficientHere is a link about Beta. It explains how Beta is calculated (regression analysis), much better than I can explain it.
Don't overcomplicate your investments.
How so, Pincher? Got a story for us?
No, not really. I guess it depends on your investment philosophy anyway.But the more I read about value investing, the more I read Graham, Buffett, and Munger, the more I see that they can make a decision in a few minutes.The longer it takes to swing the decision as to buy, the worse the investment probably is. The best ones are usually obvious.
Good advice Penny Pincher.Here is one for you all...EBITDA. Otherwise known as opererational case flow. The link below provides a good explanation of it.http://www.investorwords.com/1632/EBITDA.html
I totally agree with the person who said do not overcomplicate your investments.When you invest in a stock, your buying a part of a company. You don't want to buy it based on it's beta or current risks that it will trade down over the next quarter or so due to bad times in the given industry or challenges in the economy.You want to buy it with the idea that over the next 5 + years, the business will do well and the stock will follow. Follow the business, not the stock price from day to day. If you own a good business that you paid a good price for, you will have good results.You want to buy into a business that can grow earnings over the long run, with a solid brand and business position that will be grown and strengthened over time. And become an investor, not a speculator.And you want to pay a reasonable price. Right now, it is not hard to find stocks at reasonably low prices that pretty much guarantee a good long term result. Buying coke at $40 and holding for the next 10 years has virtually no risk in my mind.If you just follow those two concepts, and don't trade often based on technical analysis, you will have good results. And if you don't, you might want to consider buying a bunch of index funds instead. The simpler, the better. Sometimes the more simple things in life are the most profound. And remembering that you are just buying part ownership in a business is a very simple concept, and makes investing a lot easier.That along with some basic valuation strategies to realize what a good price for s tock is, and you will do very well over the long run.
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