Your Questions About What To Look For Before Investing In A Company

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Paul asks…

What to look for in stocks?

Besides researching the company, what are the most important things you look at before you invest in a stock? For example, you enter a stock symbol into Yahoo finance or Google finance and you’re given all this information. What are the things to look for? Is it the 52 week high’s and lows, is it how well or badly they’ve been doing for the past month, etc.

I’m doing this stock thing in my finance class and want some help.

Thanks.

Justin answers:

Bargains:

Price Earnings ratio under ten
Price Book ratio under one
Price at five year minimum
Stock has paid a dividend regularly for five years; a blue chip

John asks…

What are the requirements that will be asked if I am looking for investors to invest in my ranching company?

I would like to find a company to invest 50 million dollars in to my ranching idea. What will be asked of me? I don’t want to be mislead and would like to be familiar with the process before moving foward. Thanks in advance.

Justin answers:

What is your experience in the ranching industry and how does it relate to this idea. Show us a detailed business plan with at least five years of projections for income and expenses, and your strategy for achieving this.

Robert asks…

what is the cheapest way to invest in one company for acoulpe of months or so?

looking to inves in a company or two for holiday season never bought stock before. what is the least expensive way to buy a few shares w/out spending too much in fees for online trading?

Justin answers:

A couple of months is a speculation, not an investment. That said,the cheapest way to invest is by buying a CALL option. However, you need to understand how options work — that their prices is a function not just of the stock’s market price but also on the time left before expiration and on volatility. Options expire worthless if you are still holding them — or, worse (if you haven’t the cash), they expire in the money without your having sold them and, thereby, trigger your broker to by the stocks for you at the strike price.

The write-up on options provided here is deliberately confusing for the novice to ensure that you clearly understand that you MUST understand them before trading them. The Options Industry Council provides quality free education. Google it.

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