For questions related to the analysis of stock prices, stock markets, etc.

learn more… | top users | synonyms

112
votes
20answers
23k views

If a stock doesn't pay dividends, then why is the stock worth anything?

I read somewhere that companies are not required to pay dividends to shareholders (this is correct, yes?). If so, then if company A never pays dividends to its shareholders, then what is the point ...
33
votes
11answers
12k views

One of my stocks dropped 40% in 2 days, how should I mentally approach this?

Right after the event, I felt shocked and depressed. I've been engaging in stocks for about a year now but I've never encountered such a big jump in such a short time. What I'm planning to do is just ...
32
votes
6answers
127k views

Can I trust the Motley Fool?

A while back I checked out The Motley Fool while doing some research on mutual funds. I found their educational content to be a great overview of what to look for and started exploring. While The ...
28
votes
5answers
12k views

If I have $1000 to invest in penny stocks online, should I diversify risk and invest in many of them or should I invest in just in one?

I have $1000 to invest. I use Scottrade to invest in penny stocks online, they charge $7 to buy a stock and another $7 to sell it ($14 in total). Given the high volatility of these stocks, what tactic ...
24
votes
6answers
10k views

Why do people buy stocks that pay no dividend?

Before recently, Apple Inc. did not give dividend to shareholders. This makes me curious why people buy Apple Inc. stocks; while it might be due to the expectation of selling stocks at a higher price,...
16
votes
4answers
1k views

Does doing your “research”/“homework” on stocks make any sense?

One thing about investing has always bothered me. You constantly hear people saying you need to "do your research" or "do your homework" on a company before buying their stock. I rarely watch Mad ...
15
votes
1answer
974 views

Will the popularity of index funds cause a pricing bubble in the stocks that make up an index?

I can't help but notice the popularity of index mutual funds over actively managed funds. I think all the arguments are sound, but I have one worry: Index funds are run by buying the stocks listed ...
13
votes
3answers
665 views

If low-cost index funds are considered the best investment, why are there so many high-cost, managed funds?

The general consensus is that the single best indicator of a fund's future performance is the its expense ratio (source). If you look for more than 5 minutes online you discover the Bogleheads ...
13
votes
5answers
6k views

What publicly available software do professional stock traders use for stock analysis?

What publicly available software do professional stock traders use for stock analysis? I assume they use something more advanced than Google Finance... right?
12
votes
5answers
3k views

Why don't SPY, SPX, and the e-mini s&p 500 track perfectly with each other?

These tickers (SPY, SPX, /ES) are all based off the S&P 500 yet the relative lows and highs diverge. Can someone provide a basic explanation what causes this to happen? I feel like it may stem ...
12
votes
5answers
18k views

Which Benjamin Graham book should I read first: Security Analysis or Intelligent Investor?

I recently graduated from engineering and I want to know more about investing. I'm particularly interested in Benjamin Graham's ideas. I want to read all of his books, but I couldn't decide which one ...
10
votes
2answers
2k views

How can this stock have an intra-day range of more than 90% on 24Aug2015?

I am looking at this stock BKCC and was shocked at one point at its price of only $0.97. Just within 1 hour of opening, BKCC traded between $0.97 and $9.5. How can this be so, particularly when it is ...
10
votes
1answer
3k views

Why is this stock price inflated by 70x its real price?

The price for CSP1 (London Stock Exchange) has a short term price history that indicates the prices are roughly 7000% of what they are in reality. For example, on Jan 29th 2016 the price was reported ...
9
votes
5answers
4k views

What are the implications of a corporate stock repurchase or share buyback program?

Zynga's board recently announced their authorization of repurchasing up to $200M shares of Class A stock. What are the implications when a company repurchases their own stock? Some specific questions:...
8
votes
2answers
260 views

How much of my capital should I spend on subscribing to a stock research company?

I've subscribed for a free 2 month trial to a stock research company and so far it has made me good money so far. I've now been offered a 1 year subscription for a fee of $599. I have a capital of $...
8
votes
3answers
6k views

Should I use regular or adjusted close for backtesting?

In an attempt run few backtesting tasks, I have obtained some historical data. I noticed that there are two closing prices available, regular close and adjusted close. After doing some reading, I ...
8
votes
5answers
2k views

Importance of dividend yield when evaluating a stock?

Why is the dividend yield (Dividend divided by market price) of a stock a valuable parameter to consider when evaluating a stock? By looking at it, what can one infer about the stock? edit: Thanks ...
8
votes
3answers
13k views

What does “more buyers than sellers” in technical analysis of stocks actually mean?

I often hear/read technical analysts looking at volume and price action on a chart and claiming that there are "more buyers than sellers" or vice versa. Since every trade requires a buyer and a ...
7
votes
4answers
659 views

How can I remove the movement of the stock market as a whole from the movement in price of an individual share?

I think it would be useful to have a chart that shows how much a specific share out- or under-performs the composite index, e.g. Apple compared to the Nasdaq-100. I think (though I may be naive about ...
7
votes
2answers
463 views

Correct calculation for determining real business book value per share?

I'm trying to calculate the real value of a business and, as an example, I picked Netflix. From their latest financial statements I can see that: Assets value is: $3,065,709,000 Liabilities value ...
7
votes
1answer
686 views

Can one see the transactions in the stock market?

If I am interested to see the individual transactions in a certain exchange market (e.g. NYSE) for a certain stock (e.g. GOOG) - is it possible?
7
votes
2answers
996 views

What does “/” and “^” mean in ticker symbols? How to translate these symbols into yahoo?

I have downloaded a complete list of all NYSE stock symbols from the NASDAQ website here. As it turns out, many of these symbols are not recognized by the yahoo finance page. In particular, there ...
7
votes
1answer
210 views

How useful is the PEG Ratio for large cap stocks?

I've read a few articles recently that discuss the PEG (Price/Earnings to Growth) Ratio and how, when it's 1 or lower, it can mean that the company is undervalued, and thus a good investment (I know ...
7
votes
2answers
3k views

Where can one graph portfolio performance over time?

I'm used to my employer provided 401k website, which allows me to see a "personal rate of return" over a specified time period, plotted on a line chart. It also allows me to see individual stocks and ...
7
votes
1answer
155 views

Analyze a security using Benjamin Graham's Defensive Investor Criteria

I would like some help evaluating a security using Graham's Defensive Investing Criteria (Chapter 14 of the Intelligent Investor). As an example security, let's look at NYSE:MEI and each of the ...
6
votes
5answers
6k views

Any difference between buying a few shares of expensive stock or a bunch of cheap stock

I don't have a ton to invest. I have $1,000 to put into a stock and I'm eying 3 of them. One is currently trading at ~$100/share, another at ~$260/share and another at ~$25/share. So I could get ~...
6
votes
4answers
2k views

What could cause a stock to trade below book value?

A company's book value is the worth of all their assets. What would cause a stock to trade below book value?
6
votes
1answer
135 views

Can Mutual Funds Invest In the Start Up Market?

This question refers to this article. I can't find Snapchat anywhere on the US stock exchanges as a public company, so I'm assuming that the Fidelity Blue Chip was holding this through the start up ...
6
votes
1answer
362 views

Will the stock market continue to grow forever?

I am relatively new to investing. I understand that the stock market, in some sense, reflects what happens in the real economy. For example, if the U.S. economy grows, the stock market in the long ...
6
votes
1answer
148 views

Where can I obtain historic ratios for a sector?

I am trying to compare an individual company's historic annual ratios (leverage, liquidity, profitability, shareholder return, etc.) to its sector average. However, I can't find these numbers for a ...
5
votes
4answers
8k views

Why does the biotechnology industry have such a high PE ratio?

I'm looking at this link, which lists P/E ratios by industry. I see that biotechnology has a P/E ratio of 145, which is very high compared to other industries. What is so special about this industry ...
5
votes
1answer
276 views

How is it possible that a stock has a P/E of 0.01?

I was looking at this stock: Berkshire Hathaway Inc. (BRK-B) (The Class B shares). How come it has such a low P/E ratio?
5
votes
3answers
7k views

If a company's assets are worth more than its market cap, can one say the shares must be undervalued?

Imagine a company sold a 10% stake in one of its assets to a 3rd party for $100 million. It would be fair to assume that the asset is worth $1 billion. If that company had 200 million shares issued, ...
5
votes
1answer
15k views

Is there a difference between a company's profit vs earnings?

I am reading through a company's annual report trying to do research on whether I should invest in them. I'm new at all this and it's got a lot of complicated terms which I'm unsure about. One thing ...
5
votes
1answer
2k views

Where can I find a breakdown of Google stock ownership?

I'm looking for a not too out of date source of information that lists who owns Google stock and how much they own. Is this available online somewhere?
5
votes
3answers
1k views

How do I factor dividends and yield into the performance of a security?

The basic stock chart tracks the price of the stock. As discussed here the price of the stock drops by the amount of the dividend. So when a dividend pays out the stock chart makes it look like ...
5
votes
1answer
782 views

Why can the institutional ownership of shares be larger than 100%?

Why it's larger than 100%? What is the meaning of this number? Thanks,
5
votes
2answers
2k views

Valuation, pricing, and analysis of securities

I was wondering what differences are between valuation and pricing of securities? To me, they seem identical and for identical purposes. If not, what is each of them trying to get from what is ...
5
votes
1answer
426 views

Understanding company income statements: What is a good profit margin that would make it worthwhile to invest?

I have been learning about how to read and understand a stock company's income statement and using those variables to determine the worth of the stock. My question is, what is a good profit margin for ...
5
votes
3answers
630 views

Average Price of a Stock

I realized that most finance and stock screener web sites don't provide the metric of the mean (average) price of the stock over a certain period of time, for example, the mean value of AAPL shares ...
5
votes
4answers
184 views

Why is it important to research a stock before buying it?

I’ve been thinking about investing some stocks and everyone is telling me that I really should research each stock, look through their financial statements and track the news and understand everything ...
4
votes
3answers
1k views

Why and why would/wouldn't a company split their stock?

When Apple was in the high $600 or so range, it split 6 times and made it more affordable to purchase more shares for less, even though the value was technically the same. I see companies like Google ...
4
votes
4answers
1k views

If a stock has only buyers and no sellers how does its price go up?

I have been watching a stock for the past month. Nobody has been selling it, but every day the price has increased. If there are no sellers, it means there is no trading happening, so how can the ...
4
votes
4answers
767 views

How much of each stock do index funds hold?

An S&P500 index fund will hold each of the 500 stocks that are in the S&P 500. Does it target holding an equal number of shares of each stock? An equal dollar amount? Does this vary based on ...
4
votes
6answers
4k views

Is an analyst's “price target” assumed to be for 12 months out?

I was surprised to see this announcement from Zach's Investment Research re: AAPL stock: "We maintain our Neutral rating on the stock and raise our price target to $354.” But AAPL is today trading ...
4
votes
2answers
1k views

Does money made by a company on selling its shares show up in Balance sheet

When we purchase shares of a company for a certain sum of money (e.g: 1000 dollars), is this money immediately available to the company as a cash flow? In the balance sheet, will this money show up ...
4
votes
3answers
343 views

Is it true that more than 99% of active traders cannot beat the index?

Recently my pension fund gave a presentation at the place where I work. They explained that they invest by following the index of several stock exchanges. They reason that since 99% of the active ...
4
votes
2answers
176 views

Is there a way to set a stop for a stock before you own it?

Here's the situation: I like to place buy orders when the market is closed. However, I do not like to wake up at 630 (pacific time) to set a stop order to sell the stock. Is it possible on merrill ...
4
votes
3answers
814 views

Why would analysts recommend buying companies with negative net income?

Can anyone explain why some analysts recommend companies in the biopharmacy sector as a "buy" even though they have high R&D costs and no real profit? I followed three companies and I see the ...
4
votes
1answer
154 views

Bids and asks in case of market order

Suppose that person A places buy market order with quantity 1000 of firm XYZ. Now in the market there only are various asks of quantity: quantity 100, quantity 2000, quantity 1000. Each ask has ...