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Value Investing: Useful Terms

When it comes to Value investing in the stock market, many want to run before they can crawl. Many think that they can predict the market with good accuracy and come out getting rich quick. The truth is, you likely have a better chance of getting rich quick by hitting the casinos in Vegas then getting lucky at the stock market. Value investing takes time. Those investments that pay off quickly have a high element of risk attached. Before going in head first, people should learn some basics. In this article we will look at some basic value investing words to help you get started in the stock market.

No one should invest anything into the market unless they know what stock actually is. Basically, a stock share is a piece of a corporation. Generally, the larger the corporation the more stock shares they have. Once you buy your stock shares, you are then part owner of that company. They company will pay you dividends each quarter depending on how well the company stocks do.

The earnings per share is the profit or amount of money you earn by owning shares. If you own 100 shares of a company for 1 dollar each and the price rises to 1.50, you earnings or profit will be 50 dollars total and 50 cents per share.

The term IPO is one that all investors should be familiar with. It stands for initial public offering. It means that this company is offering its stock shares for sale to the public for the first time. This is also known in slang terms as going public.

When you start investing in stocks you will hear the word ticker symbol. This refers to a series of letters that stands for a particular company. You can follow up on your company’s performance easily by knowing its ticker symbol.

Finally, you will hear the term underwriter. The underwriters are the people who handle all of the paper work transactions for the company’s IPO. It is usually done by a bank or an investment company.

By knowing these terms, you’ll at least have a basic working vocabulary of the stock market. To become an expert in trading you’ll need much more information and advice. However, you need to know the basics before you make a fortune in value investing.

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  • You are right about that. We certainly need to know the basics, especially if we are just starting out. Most people fail because they forgot to consider the basic rule.