Stocks: Understand What You Buy!

"There is nothing more frightful than ignorance in action!"Johann Wolfgang von Goethe (1749 - 1832)

I don't really know how cars actually work. Not really! I know how to drive them, but if you asked me how they work, I would not really know how to definitely explain it.

That small technical limitation on my part doesn't stop me from knowing whether XYZ Autos is a quality company or not. I don't understand the cars they make, but I do understand XYZ Autos. Moreover, that understanding is critical to making a decision about the value of their stock.

There are many good and objective ways to value stocks and improve your finances. These involve looking at various financial ratios. However, one of my simplest rules for investing is that you always must understand what you are buying!

This is by no means original with me. It is a basic part of fundamental analysis!

How deeply you must research in order to understand a company before you invest in it is a rather personal decision!

Some investors feel fine with just a general understanding, while others want to know everything there is to know about the company. I think that somewhere in between is perfect.

But you must know what makes a company different from others and whether that difference adds any real value or not.

Sometimes being different is not good ...

Buy what you understand for a reasonable price and you will be well on your way towards successful investing!

haramis@greekshares.com

http://www.greekshares.com

Ioannis - Evangelos C. Haramis was born in Greece and he studied in Greece, USA and in Belgium. He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank.

MORE RESOURCES:

Decoding Dick Davis Digest - Cabot Wealth Advisory

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/0-0fd=Rurl=http://www.cabot.net/Issues/CWA/Archives/2009/01/Decoding-Dick-Davis-Digest.aspxcid=0ei=8r5nSZmHHN3EmQewzfTVDAusg=AFQjCNHuGpH0oVhsIhCQwMN0VkUn4R-tEgDecoding Dick Davis Digest/abrfont size=-1font color=#6f6f6fCabot Wealth Advisory,nbsp;MAnbsp;-/font nobr47 minutes ago/nobr/fontbrfont size=-1For investors interested in more than just individual bstocks, mutual funds/b and ETFs are also covered in the Digest. Diversification is an important b.../b/font/div/font/td/tr/table

Law School to Provide Tax Help - Inside INdiana Business (press release)

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/1-0fd=Rurl=http://www.insideindianabusiness.com/newsitem.asp%3FID%3D33268cid=1290274580ei=8r5nSZmHHN3EmQewzfTVDAusg=AFQjCNGh7a3Y4uqMKJZ2yWZsraY8H8QWUQLaw School to Provide Tax Help/abrfont size=-1font color=#6f6f6fInside INdiana Business (press release),nbsp;INnbsp;-/font nobrJan 5, 2009/nobr/fontbrfont size=-1Taxpayers with annual income of $42000 or less are eligible for the help if they have not received income from the sale of bstocks, mutual funds/b or homes or b.../b/font/div/font/td/tr/table

$72 billion was pulled from market in October - The Tennessean

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/2-0fd=Rurl=http://www.tennessean.com/article/20081224/BUSINESS01/812240395/1003/RSS6004cid=1286052730ei=8r5nSZmHHN3EmQewzfTVDAusg=AFQjCNGQo5hm2_-BYF9vUDvfwEduqaH1nA$72 billion was pulled from market in October/abrfont size=-1font color=#6f6f6fThe Tennessean,nbsp;TNnbsp;-/font nobrDec 24, 2008/nobr/fontbrfont size=-1By ES Browning ā€¢ THE WALL STREET JOURNAL ā€¢ December 24, 2008 One of the hallmarks of the long market downturns in the 1930s and the 1970s has returned: b.../b/font/div/font/td/tr/table

Valparaiso University law school to provide tax help - nwitimes.com

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/3-0fd=Rurl=http://nwitimes.com/articles/2009/01/06/business/business/doc5111dae50006ee7b8625753500743ae1.txtcid=1290476927ei=8r5nSZmHHN3EmQewzfTVDAusg=AFQjCNE7CZLZO0ypEn7JzpMvZBdigjayyAValparaiso University law school to provide tax help/abrfont size=-1font color=#6f6f6fnwitimes.com,nbsp;INnbsp;-/font nobrJan 5, 2009/nobr/fontbrfont size=-1Taxpayers with annual income of $42000 or less are eligible for the help if they have not received income from the sale of bstocks, mutual funds/b or homes or b.../b/font/div/font/td/tr/table

New Money features for you - USA Today

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/4-0fd=Rurl=http://www.usatoday.com/money/markets/2008-12-12-new-features_N.htmcid=1281995081ei=8r5nSZmHHN3EmQewzfTVDAusg=AFQjCNFz6REWezTnKaOVklFrl3DmaTLFoANew Money features for you/abrfont size=-1font color=#6f6f6fUSA Todaynbsp;-/font nobrDec 15, 2008/nobr/fontbrfont size=-1They include: ā€¢Year-to-date returns for bstocks, mutual funds/b and exchange-traded funds (ETFs). These can be found by entering the name or ticker symbol in b.../b/font/div/font/td/tr/table

Like other stocks, mutual funds show heavy losses during 2008 - LubbockOnline.com

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/5-0fd=Rurl=http://lubbockonline.com/stories/122708/bus_371683489.shtmlcid=1286282387ei=8r5nSZmHHN3EmQewzfTVDAusg=AFQjCNHv0ZpfC7aw07fEvewn1oB4S_on0wLike other bstocks, mutual funds/b show heavy losses during 2008/abrfont size=-1font color=#6f6f6fLubbockOnline.com,nbsp;TXnbsp;-/font nobrDec 27, 2008/nobr/fontbrfont size=-1By Tim Paradis | AP NEW YORK - There was one safe bet that mutual fund investors could make in 2008 - that the stock market was a place to lose a lot of b.../b/font/div/font/td/tr/table

High school investments team wins game - Greenwich Post

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/6-0fd=Rurl=http://www.acorn-online.com/joomla15/index.php%3Foption%3Dcom_content%26view%3Darticle%26id%3D17221:high-school-investments-team-wins-game%26catid%3D10:greenwich-local%26Itemid%3D68cid=0ei=8r5nSZmHHN3EmQewzfTVDAusg=AFQjCNGUoq4bxvl2YuU2jqOuNDkItE289QHigh school investments team wins game/abrfont size=-1font color=#6f6f6fGreenwich Post,nbsp;CTnbsp;-/font nobrJan 4, 2009/nobr/fontbrfont size=-1The Greenwich High School investment course is more akin to a college-level course covering bstocks, mutual funds/b, bonds and other securities. b.../b/font/div/font/td/tr/table

Be wary of US treasury bonds in 2009 - Stockhouse

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/7-0fd=Rurl=http://www.stockhouse.com/Columnists/2009/Jan-1/5/Be-wary-of-U-S--treasury-bonds-in-2009cid=1289977008ei=8r5nSZmHHN3EmQewzfTVDAusg=AFQjCNFkgvUUiFUlPLYJgSCruJIPvZW60ABe wary of US treasury bonds in 2009/abrfont size=-1font color=#6f6f6fStockhouse,nbsp;Canadanbsp;-/font nobrJan 5, 2009/nobr/fontbrfont size=-1They pulled money out of bstocks, mutual funds/b, money market accounts, even bank savings accounts and CDā€™s, and poured it into US T-bills and bonds at a b.../b/font/div/font/td/tr/table

Value? Growth? Both! - Motley Fool

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/8-0fd=Rurl=http://www.fool.com/investing/general/2009/01/02/value-growth-both.aspxcid=1289186919ei=8r5nSZmHHN3EmQewzfTVDAusg=AFQjCNHUz1sbFBbpULTUmP8LwGWqca2_dQValue? Growth? Both!/abrfont size=-1font color=#6f6f6fMotley Foolnbsp;-/font nobrJan 2, 2009/nobr/fontbrfont size=-1The distinction between value and growth stocks is such a bedrock assumption that Morningstar routinely classifies bstocks, mutual funds/b, and ETFs as one or b.../b/font/div/font/td/tr/table

City pension funds may cost taxpayers - Allentown Morning Call

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/9-0fd=Rurl=http://www.mcall.com/news/local/all-5pension.6692640jan04,0,6360412.storycid=0ei=8r5nSZmHHN3EmQewzfTVDAusg=AFQjCNHeGOHNE7W5iZlwB4PQX3ZJhkxlLQCity pension funds may cost taxpayers/abrfont size=-1font color=#6f6f6fAllentown Morning Call,nbsp;PAnbsp;-/font nobrJan 4, 2009/nobr/fontbrfont size=-1b.../b the crumbling economy has pummeled Allentown#39;s pension funds, which rely on bstocks, mutual funds/b, real estate and other investment tools for growth. b.../b/font/div/font/td/tr/table

Stocks-Mutual-Funds - Google News

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