David Uram on October 18th, 2008
What does it take to invest in the stock market? What do the so called “professionals” have that differentiates them from the rest of us?
What does it take to invest in the stock market?
First, professional money managers have the ability to read and analyze financial reports. They went through years of school to learn how to interpret a Balance sheet, Income statement, Cash flow etc. Having these skills is useful but not necessary for the readers on The Maple Investor. I’ll explain why down below.
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David Uram on July 19th, 2008
The following four books are well known among the investing community. The three authors, Peter Lynch, Benjamin Graham and Jack D Schwager give the reader a great deal of information about the stock market. They not only educate but make it interesting to the reader because the information in each book is relevant, useful and unique.
Peter Lynch
1. Learn to Earn
2. One up on Wall Street
Peter Lynch was a portfolio manager of Fidelity Magellan fund from 1977-1990 which was one of the best performing funds in the world while he managed it.
Learn to Earn is a beginner’s guide to the stock market while One Up On Wall Street is a great way to learn how Peter Lynch accomplished his outstanding results. Peter Lynch says you can outperform the professionals on Wall Street if you just put in the time and effort.
Benjamin Graham
3. The Intelligent investor
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David Uram on April 6th, 2008
Would you buy a car for $10,000 if it had no engine? What if the seller said that he would sell it to you for $7,000, would you buy it then? A car without an engine is useless to its owner. A business without profits is useless to its investors. Any stock you invest in, no matter how great of a bargain you bought it for, will cost you a lot of money if the business cannot make a profit. It doesn’t matter if you paid 10 cents for the stock or $10 for the stock, if the stock price goes to zero you lose 100% of your money.
What a stock price means to an investor
The price of a stock is useless on its own. You might as well throw darts to decide on a stock investment if you’re going to base your investment decision solely on a stock price. A stock that cost $100 a share is not necessarily a better investment than a stock that is $1 a share and vise versa. A penny stock, which most beginners lean towards as they first start out, is usually the worst kind of stock to start with. Most beginners think that penny stocks are a bargain. What one has to realize is that it’s not the price of the stock that matters but how you use it to value a business. It’s the business that you are investing in, not a stock symbol or blip on the screen. If the business does well, the stock price will follow. Most penny stocks are penny stocks because the businesses have not performed well.
I said that any stock price is useless on its own unless you use it for something. A stock price can be used in so many ways, two of which are very important to understand.
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David Uram on March 11th, 2008
Why is a company’s market cap important?
A company’s market cap is what the market thinks the company is worth.
Most of us know that the market cap is found by taking the price of the stock and multiplying it by the shares outstanding. Let’s use Apple Inc (Also known as Apple computer) as an example.
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