To Improve Your Chances of Beating the Market – Analyze it as a Stock
Comments OffOne great and useful tip to help you beat the market is to value each major index as if it were an actual stock. For example, what is the price-to-earnings ratio? What is the return on equity, return on assets, and capitalization structure? What is the growth rate of earnings over the past decade? What [...]
Frictional Expenses: The Hidden Investment Tax
Few investors are aware of the tremendous damage so-called frictional expenses impose on investment performance. By merely reducing these expenses, you may be able to significantly increase your long-term rate of return by lowering your overall cost basis. Commissions and Fees The most frequent frictional expense is brokerage commissions and fees. Thankfully, with the advent [...]
Think of Your Stocks Like Real Estate
This past week, I was considering buying a home near my parents so that when I was back in area, I would have a place from which to work and live. With the real estate market falling to 2004 prices, on average, it seemed a good time to buy (value investing is not limited to [...]
Comments OffThere are three categories of financial capital that are important for you to know when analyzing your business or a potential investment. They each have their own benefits and characteristics.Equity Capital Otherwise known as “net worth” or “book value”, this figure represents assets minus liabilities. There are some businesses that are funded entirely with equity [...]
The Five Components of an Investors Required Rate of Return
Comments OffIn financial theory, the rate of return at which an investment trades is the sum of five different components. They are: 1. The Real Risk-Free Interest Rate This is the rate to which all other investments are compared. It is the rate of return an investor can earn without any risk in a world with [...]
