What is a stock and stock market: Many private companies when needs some capital goes public by offering some value of the company to the public. Generally its in share value which are initially very low value. This is called as stock of the company. The place where people can but these stocks and sell them its called as stock market. The stock market is different for each country and its name is also different but the companies can list themselves in the local stock market as well as the global stock market.

Trading: Trading is the name for selling and buying the shares from one person to another person. It is of two types generally inter-day and intra day. Inter day trading means you can buy few shares keep them with you for some days or months even years and sell them. Intra day means you but the shares and sell them on the same day. The both types are associated with some charges.

Risks involved in the share market: Share market is the game of life. It can make life’s as well as it can destroy them. Common people usually keep themselves away from the share market. I have seen people getting millions of dollars a day and also seen they lose it.

How to do share trading: There are many emerging markets world wide where you can invest money and get good returns like India. You can get lots of info on line in investing in indian stock market. Just get a good study of all first and then invest. After all its the game of life.

]]> http://capitalaction.org/stock-market-a-overview/feed/ 0 http://capitalaction.org/look-out-for-the-best-deals-undervalued-stocks/ http://capitalaction.org/look-out-for-the-best-deals-undervalued-stocks/#comments Thu, 11 Mar 2010 04:41:56 +0000 GuestPoster http://capitalaction.org/?p=386 When investing in the stock market one is always on the look out for the best deal.  What can they buy low in order to sell high later and make a profit, this is why people invest right?  To find these types of investments smart investors turn to undervalued stocks.

Undervalued Stocks are stocks whose current market price is under what its value should be.  It could be a good solid company that has had some bad press recently and because of this, their stock price fell.  Stock price could have also fallen because of a drastic selling trend of all stocks and could have nothing to do with the company itself.

An example of this would be the Walt Disney Company; Disney stock price plummeted with everyone else’s at the end of 2008.  By March of 2009, their stock was selling at just 15.99 a share (http://finance.yahoo.com), almost exactly one year later their stocks were back up to over 32.00 a share.  Anyone that would have invested in this undervalued stock with this solid performing company in the spring of 2009 would have doubled their money in a year.

If a stock has a low P/E (price to earnings ratio), price to book ratio and price to cash flow ratio it will flag investors that people are not excited about this stock.  It also signals that this stock is possibly an undervalued stock.  Before investing however, check the last five years worth of these ratios to find if this is a good buy from a normally solid company or if this is a company that is slowly going out of existence.

Another way to determine if a stock is undervalued but a good investment is by looking at its EBITDA multiples (earnings before interest, taxes, depreciation and amortization).  To put it simply EBITDA is a look at the company’s profits.

All of these factors can help you find stocks that are undervalued and possibly a good investment.

If you are an investor you need to do the fundamental research on the company you are going to invest in before you make your purchase.  Are you going to hold onto this stock until you retire, collecting dividends the whole way?  Are you going to sell the stock ten years from now?  What if the price of the stock doubles, is that enough profit?  These are the questions you must answer if you are looking at a stock as a long term investment.

If you are trading on a shorter time horizon then you need to consider other factors as well.  First check out the fee schedule for your broker.  Are you paying more in commissions than you need to be?  An active trader can spend thousands of dollars a year on commissions alone, so it pays to look into the cheap stock trading sites.  If you can cut your commissions down from $10 a trade to $5 a trade you could save yourself over $10,000.00 a year if you regularly make 40-50 trades a week.  As stock traders, there are so many things we think about on a daily basis that it is good to take a look at the basics every once in awhile.