Tech was the big winner during the pandemic. We see bulges in the market all the time, where one or two sectors gain dramatically more than the broad range of stocks. It’s clear which has a better affordability rating at the moment.Ĭash flow. But Amazon shares are down almost 50% in the past 12 months, and the p/e ratio is still in nose-bleed territory at about 84. When momentum was working in the company’s favour, that didn’t matter much. It’s making money, but investors were paying too much for those earnings. A company may be profitable but is it fairly priced – in other words, affordable? We’ve just seen the shares of many profitable tech companies slapped down because their price/earnins (p/e) valuations got totally out of whack. But my strong preference is to see it all proved on the net earnings line.Īffordability. I don’t dispute that these offer useful insights into a company’s financial performance. EBITDA (earnings before interest, taxes, depreciation, and amoritization) is one. There are other measures that some organizations focus on to prove their viability. After subtracting expenses from revenue, what’s the bottom line? If a company is making money, I’m interested in exploring it further. After suitability, I rank this at the top of my priority list when judging whether to buy a stock. If you’re looking for growth, avoid sectors like utilities. For example, if you’re investing for income, non-dividend stocks are not appropriate. What is your investment objective, and how much risk are you prepared to take to achieve it? There is no point buying stocks that don’t fit your plan. Before you buy a single stock, you must have a strategic plan. Use it to judge the appropriateness of any security you may be considering. With all this in mind, I’ve put together a stock shopping list. I can predict with some degree of certainty that it will be higher in five years. I can’t tell you where it will be in six months. It’s more expensive than at the end of September. The market is cheaper now than it was last January. So, when is the best time to buy stocks? Any time, as long as you follow certain basic rules. Anyone who claims they can time the market on a consistent basis is lying. Rather it’s because no one can identify a bottom or peak except in hindsight. That’s not because I expect a prolonged bear market, although that is certainly possible. If you’re waiting until the market bottoms out to buy stocks, you may wait a long time. Use these basics to start your stock research
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |