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Another ratio used by value investors, as well as seekers of cash flow, is the dividend yield.
Whereas value investors seek companies with relatively low price-to-earnings (P/E) and price-to-book (P/B) ratios, they desire companies with high dividend yields.
Today we will look at the dividend yield. (more…)
Another common analytical calculation is the price-to-book (P/B) ratio.
This is popular among value investors.
While price-to-earnings considers a company’s future earnings potential as a way to determine share price, P/B incorporates what the company owns.
Not a ratio that I find very useful, but many others do, so you shall not suffer for my biases.
We will cover how to calculate and use P/B ratios, followed by limitations in the ratio’s effectiveness. Then I will show you how to make the P/B ratio a little more practical. (more…)
Within equity analysis, the price-to earnings ratio is the most common calculation.
Key to any analytical style, it is one of the cornerstones for value investing.
Today we will look at the concept and its uses. We will also review some of the limitations of the price-to-earnings ratio. (more…)
Equities are often viewed through the prism of being either value or growth stocks.
This is especially true when reviewing different investment styles for equity funds.
Today we will take a look at value investing. (more…)
I just saw the June 2010 worldwide results for the Chartered Financial Analyst exams.
109,705 students wrote one of the three exams this June.
The pass rates were: Level I, 42%; Level II, 39%; Level III, 46%. (more…)
A company’s market capitalization (commonly shortened to “cap”) is found by multiplying the current share price by the number of shares outstanding.
Market capitalization is useful in comparing companies of similar size.
It is also used as a tool by mutual funds when determining investment style.
So what are the different market capitalization segments? (more…)
Today we will begin an examination of mutual funds.
Why my interest in writing about mutual funds?
First, mutual funds are extremely popular and there are many funds in existence. So whether you intend to or not, you will come across funds in your investment travels. (more…)
Investment funds are collective investment schemes.
That means that many investors aggregate their money in a single investment vehicle.
In theory, aggregation allows some or all of the following to individual investors: a simple way to create and maintain an investment portfolio; better portfolio diversification through asset classes and time; access to investments that cannot be bought by small investors; improved liquidity; fund management by investment professionals; economies of scales on expenses that reduce costs allocated to any one investor; consolidation of tax information.
Today we will review four types of investment funds. (more…)
A few words today on long and short positions in investing.
Being Long
A long position is the norm in investing.
You buy an asset in anticipation of an increase in value. In future, if the market price rises, you sell the asset and realize the profit. You are long because you own the asset.
For example, you invest $5000 in shares of Microsoft at $25. You are long 200 shares.
Being Short (more…)
In Part I we looked at a few areas of concern when comparing online brokers: reputation and reviews; minimum funding levels; available methods to make trades; commissions; fees.
All important and fairly obvious.
Today we will look at a few more areas to compare online brokerage firms.
Some of these may be less obvious, but I think they are also important for investors. Especially those that wish to create cost effective, well diversified investment portfolios. (more…)
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