Summary of Tools and Tips to Evaluate Investments

(9 of 9)

Summary of Tools and Tips to Evaluate Investments

Evaluating an investment and the company that issues it is called fundamental analysis—as opposed to technical analysis, which examines the investment’s behavior in the market. Both types of analysis have their tools (and their sworn defenders).

Evaluating investments takes time and practice, which is why many people prefer to rely on brokerages to do the work for them. Whether you choose to do the work yourself or not, at least you now know what kinds of tools are available to you.

Practical Ideas I Can Start with Today

  • Consult the financial pages (online or in a newspaper) for a listing of stock P/E ratios of stocks I am interested in.
  • Obtain annual reports on companyies I am interested in by either contacting the companies directly or finding them on the EDGAR database. Read the financial statements in them.
  • Consult betas on select stocks by consulting beta books or brokerages.

What you have learned

  1. Understand Company Earnings
  2. Use Financial Statements to Evaluate Investments
  3. Using Price/Earnings Ratio to Evaluate Stock
  4. Use Price/Book Ratios to Find Value Investments
  5. Asset Utilization Ratios Measure How a Company Is Managing Its Assets
  6. Use Profitability Ratios to Compare Investments
  7. Using Beta to Guide Your Investment Decisions

Find out what you have learned