Beginning Investor Terms – Dividend

In the context of the stock market, a Dividend represents a cash payout of earnings usually to the common shareholders of a company. Companies are not required to distribute any earnings. So, because a company has high Earnings per Share (EPS) doesn’t mean there is any Dividend at all.

Beginning Investor Terms – Discounted Cash Flow (DCF)

Discounted Cash Flow is a way of estimating the current value of an investment in today’s dollars based on assumptions of future growth of cash flows discounted back to the present. This is a vital concept to understand for valuing long term investments, not just in stocks but Real estate, businesses, etc. Once you have determined the value for an investment you compare it to the current price to help you decide whether it is worth investing in. One can easily mislead oneself with the incorrect use of DCF.

Exploring Premium Services – Opportunistic Investor

Anyone considering investing money in a premium investing service remember should be mindful of two things. For a beginning investor the important item is whether or not a service fits your investment philosophy. In makes little sense to pay money for technical trading tips if you are fundamental investor. Second, and this is important for the small money investor, make sure the service is worth the money

Free Cash Flow – Beginning Value Investor Terms

This is the latest in my on going series of Beginning Investor Terms. Free Cash Flow (FCF) is a similar concept to Warren Buffett’s idea of “owner earnings.” It is an important concept in value investing largely because it is often a preferred bit of a financial data to Earnings.

Checking your data before you Invest – Valuation

If you are going to invest in a company you need to collect data about the financial workings of the company.For the Excel users on the PC platform I recommend Old School Value’s free spreadsheet for Net Net’s and his premium (read not free, although a good value) Discounted Cash Flow spreadsheet

Beginning Investor Terms – Penny Stocks

Penny stocks are really any stock whose price per share is under a buck. The traditional wisdom is that Penny stocks are too be avoided at all costs. They are often volatile and illiquid, that is not traded in sufficient volume to enable easy entry into or out of a position in that equity.

Beginning Investor Terms – Price/Book ratio

It has been a couple of weeks since we had our last Beginning Investor Terms post, so lets get back in the saddle.

The Price to Book ratio (P/B) is a classic Value oriented term that is vital to understand, for understanding most schools of value investing. The equation is PB = Price per share/book value per share. Or an alternate is Market Cap/Book Value.

What not to believe for Beginning Investors

A lot of crap has become accepted in financial and academic circles. Some ideas also end up in investing circles and they are regularly recycled like the theory is fact. Sometimes the has already been discredited or is logically foolish, but they get pushed on the unsuspecting anyway. Remember if an idea seems illogical, it probably is. Let’s look at a couple these ideas and how they can help us anyway.

Searching for a Good Value Stock

I spent the better part of this last weekend researching ideas for investing. I know I have been on a tear about the state of the stock market and the risks moving forward, but I didn’t think after fifteen hours of research I would come away empty handed. But I did.

Investing Conference for Beginning Investors – AAII

Part of this blog’s mission is to help beginning investors gather the essential information so that you can make informed investment decisions on your own.

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