Straipsnis Econsoc zurnalui (III dalis)
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| 2006-11-28 00:51 | perskaitė: 959
Straipsnis Econsoc zurnalui (III dalis)
Another way of searching for lucrative stocks is to delve companies’ financial statements, trying to calculate various ratios, to evaluate company’s long-te
Another way of searching for lucrative stocks is to delve companies’ financial statements, trying to calculate various ratios, to evaluate company’s long-term position, whole industry’s position. One of the strategies is to compare book value to market value and then take appropriate actions. It is called Value investing. Of course, I should mention that Warren Buffet, second richest man in the world, uses this strategy. Another strategy is to search for Growth stocks. This was extremely popular in 90’s, when dotcom
(“.com”) companies were viewed as of limitless opportunities. In that way, stock valuation is highly influenced by investors’ future expectations. You can even apply sort of mixed analysis: I have formed virtual portfolio of around 10 stocks listed in London Stock Exchange by searching for stocks with low PEG (http://www.investopedia.com/terms/p/pegratio.asp), P/E (http://www.investopedia.com/terms/p/price-earningsratio.asp) ratios and high growth expectations. My portfolio has grown about 5% in three months so far. Undoubtedly, there are many more strategies to follow – it is up to you to chose, which one is the best.
Alternatively, if you prefer to have more free time (of course you will have to pay for it), you can choose from great variety of mutual funds or index funds. That means, you will hire (indirectly) experienced professional fund manager to manage your funds. It is no surprise that mutual funds have become increasingly popular these days, since many people are not so confident with investing or simply feel lack of time but, however, they want to benefit from impressive market movements. Thus, the idea of someone looking after your savings to yield income sounds attractive, even though you will have to pay fees for that manager. Or you could buy index fund’s shares. This sort of fund is simply replication of certain index. For example, index fund can track FTSE 100 or Dow Jones Industrial Average. In that way, your savings will almost identically (don’t forget about the fees) reflect general market’s performance.
To sum up, the art of investing simply can’t be explained in one article. There are thousands of books that delve this way of saving your money. I have just tried to outline this activity briefly so that it could be your starting point for further progress. What I could recommend, if you find this topic both lucrative and interesting, is to try to read number of articles in www.investopedia.com. Those articles will provide you with more in-depth knowledge about it. Of course, to gain true understanding you should read respective books. In my opinion, those worth reading are these (I have got no doubts that there are many more):
• “The intelligent investor” by Benjamin Graham (bible for value investing)
• “Technical analysis for the financial markets” by John Murphy (great book about technical analysis)
• “Intermarket technical analysis” by John Murphy (this book explains how all markets (equities, currencies, commodities, debt markets) are related and how to use those relationships in your investment decisions.
By Mantas Skardzius