Many people who are very new to stock market investing are extremely naive when it comes to share prices and market valuations. This is perfectly understandable because no-one is an expert right from the start. However you do need to learn certain things before you start investing your money for real.
Some amateur investors automatically assume that a company?s shares are cheap just because their share price is very low. However this is a completely false assumption to make and has no basis of reality at all. The truth is that it doesn?t really matter what the actual price per share is. It is the actual valuation that is important.
The valuation of a company is determined by its market capitalization, and this is calculated by the number of shares issued multiplied by the current share price.
So you can get a situation where a company with a very low share price can actually be a bigger company with a higher market capitalization than one with a much higher price. Indeed this is the case with Lloyds and Randgold, where the former is around 10 times bigger than the latter despite having a very low price per share.
As an investor you need to look at things like market capitalization and price/earnings ratios amongst other things. If a company has a very low P/E ratio in relation to all the other companies in the same sector and is expected to grow in future years, then you could argue that it is currently quite cheap. It doesn?t matter at all what the actual share price is.
While trading online, it will always be a good idea to have a tool or resource that will help you know when and how to buy good cheap stocks.
The top stock trading software can do chart analysis to help pick good cheap stocks. Stock trading software advice helps you in choosing a company that is stable as well as in an expanding nature.
MyClime is an innovative stock market valuation and research service that gives Australian share market or value investors all the information they need to accurately assess stocks. MyClime provides its members with independent market commentary, research and stock market tips with no hidden agendas!
To know more about Stock Investing, please visit the site https://www.myclime.com.au
MyClime is an innovative stock market valuation and research service that gives Australian share market or value investors all the information they need to accurately assess stocks. MyClime provides its members with independent market commentary, research and stock market tips with no hidden agendas! To know more about Stock Investing, please visit the site https://www.myclime.com.au
Source: http://whatstockstoinvestin.com/stock-investing-with-myclime/
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