Mastering stock market basics for successful investing is simple, but it's not easy.
One of the big myths of the last bull market since 2003 was that the stock market was essentially a savings account that returned 15 percent per year-at the least. Unfortunately, as many investors discovered when the bubble popped in 2008, things that look too good to be true usually are.
| Management Effectiveness | Valuation |
|---|---|
| Return on Assets (ROA) | Free Cash Flow (FCF) |
| Return on Equity (ROE) | Discounted Cash Flow (DCF) |
| Return on Invested Capital (ROIC) |
That's the bad news. The good news is that the basic principles of successful stock picking aren't difficult to understand, and the tools for finding great stocks are available to everyone at a very low cost - you dont need expensive software or high-priced advice to do well in stock market. All you need is patience, an understanding of accounting and competitive strategy, and a healthy dose of skepticism.
How can you equip yourself to make investment decisions yourself? Is it possible to cut short the learning curve in mastering stock market basics?
Why not make a start, by checking out the links on this page!
| Financial Strength | Valuation Ratios |
|---|---|
| Quick Ratio | Price to Earnings (P/E) |
| Debt to Equity (D/E) | Price to Sales (P/S) |
| Interest Coverage | Price to Book (P/B) |
| Current Ratio | |
You will be on your way, once you have absorbed the stock market basics outlined above.
One more thing to think about - Market entry-exit decision-making models. This will come in handy, when you are suddenly faced with (you are sure to face these sooner than later) unusual to extraordinary valuation levels - market peaks, or market troughs. Will buy-and-hold serve you well in all situations? Probably not.
Would you neeed a refined investing strategy? Check out some articles that should be thought-provoking!
