Chroma Investing

Value Investing for beginning & small time investors and the value investing strategies of Graham & Klarman

Beginning Investor Terms – 10k

In investment terms a 10k is a Securities and Exchange Commission’s (SEC) required filing for publicly traded domestic companies.The gems within this filing include audited financial information, historical and structural information, descriptions of subsidiaries as well as risks and strategies for the future.

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 – 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.

Beginning Investor Terms – Price Earnings Ratio (P/E)

P/E or Price Earnings Ratio is the single most discussed concept there is in stock investing. That doesn’t mean it is the most important. Because a mind numbing number of people discuss Paris Hilton doesn’t make her important. O.k. maybe I have gone too far. P/E is more important than Paris Hilton. It is just overused and its limitations are not always understood by novice investors.

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