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Companies issue stock as a way to raise capital for expansion, product development, and other expenses. Stock certificates represent a stock investor’s claim on a company’s assets and earnings and potential earnings and profits. Owning stock, however, doesn’tmean an investor manages the day to day operations of a company, but it does give the investor a vote for the elected board of directors. Investors generally use brokersto facilitate transactions and make stock market investments on their behalf. Using a stockbroker is an effective and efficient ways to buy and sell stock. Stockbrokers will monitor the market, identify trends, and execute trades on behalf of their clients. Brokerage firms charge fees for their expertise, research, and management. Additionally, a broker makes a commissions (around $150 per trade) when he or she makes a stock market investment. Stock investors who use a brokerage firm, spend time with an advisor discussing long and short term financial goals and creating a portfolio designed to meet those goals and objectives before making a stock market investment. Online trading platforms and discount brokers, provide investors with a less costly alternative for making stock market investments. These platforms provide investors with the technology to manage and execute trades on their own. Sites like Bloomberg News, Google Finance, and Yahoo Finance provide extensive research on companies, their earnings, and their liabilities. On-line brokerage sites give stock investors the platform, but not the expertise to execute stock market investments and trades. Successful on-line investors have put a significant amount of time into researching the right mix of stocks. Solid stock market investments are based on a number of factors, including: • Earnings: You want to see progressive, if not significant growth from year to year. • Sales: These should also steadily increase every year • Debt: You would like to see the debt decrease every year. At the very least, the company’s debt should be lower than its assets. • Equity: Subsequently, you should growth in the company’s equity every year. There are other measures to consider before making a stock market investment: Investors should look at: • Price to Earnings Ratio: For large cap stocks, the P/E ratio should be under 20. For all other stocks, it should register below 40. • Price to Sales Ration: The Price to Sales Ratio should be close to 1. • Return on Equity: The ROE should grow by 10% every year. • Earnings Growth: You will want to look for sustained earnings growth over several years. A company with an earnings growth of 10% or higher is a very strong and healthy company. • Debt to Asset Ratio: Debt should be half of all assets. These areas provide investors with a solid understanding of the company’s economic outlook and potential for growth. Once an investor has analyzed a company, he or she can determine if the company is compatible with long and short-term investment plans and financial goals. Diverse stock market investments combine a mix of stocks, bonds, and mutual funds covering a number of different industries and areas. Are you looking for more information regarding stock market investments? Visit http://www.smart-investing-in-stocks.com/invite.html today for more information!
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