This is when you invest a fixed amount of money on a regular basis.
It does not matter what the stock market or individual stock price is doing.
When you use this method, you don't have to time the stock market.
Most people want to be an investor
But most people don't understand common investing terms.
Here are 10 terms that every investor should know:
This is when you invest a fixed amount of money on a regular basis.
It does not matter what the stock market or individual stock price is doing.
When you use this method, you don't have to time the stock market.
These are stocks that move in cycles with the broader economy
For example, when the economy is booming, airlines and hospitality stocks are booming as well.
If the economy sucks, people don't have the extra money to purchase airline tickets.
This is a ratio that takes the firms common equity divided by its number of shares outstanding
A possible undervalued stock will have a higher book value per share compared to its underlying stock price.
Intrinsic value is when you determine the true value of a stock price.
Once you determine intrinsic value, you can determine if the stock price is undervalued or overvalued.
Warren Buffett preaches finding the intrinsic value of a stock.
DCF is a valuation method used to find the intrinsic value of a stock based on future cash flows.
The present value of expected future cash flows is arrived at by using a projected discount rate.
This is the formula that I use.
The market cap is what is used to determine the size of every public company.
When you look at the value of a company, you should look at the market cap before the share price.
Market Cap = Current Share Price * Total Number of Shares Outstanding
The price/earnings to growth ratio is a stock's p/e ratio divided by the growth rate of its earnings for a specific period.
This ratio is used to determine a company's value while factoring in future earning's growth.
A PEG ratio below 1 is undervalued
The price-sales ratio is a valuation ratio that compares a company's stock price to its revenues.
Basically each dollar that the company makes is given a value.
This ratio shows how much investors are willing to pay per sales the company makes
ROE is a measurement of how efficient a company is in using its assets from their shareholders to create earnings.
The higher the ROE, the more efficient a company's management is at generating income and growth
The rule of 72 is a simple formula that is used to estimate the number of years required to double the invested money at a given annual rate of return
It is best used when the rate of return is between 6-10%
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THREAD: 12 Things Everyone Should Know About IQ
1. IQ is one of the most heritable psychological traits – that is, individual differences in IQ are strongly associated with individual differences in genes (at least in fairly typical modern environments). https://t.co/3XxzW9bxLE
2. The heritability of IQ *increases* from childhood to adulthood. Meanwhile, the effect of the shared environment largely fades away. In other words, when it comes to IQ, nature becomes more important as we get older, nurture less. https://t.co/UqtS1lpw3n
3. IQ scores have been increasing for the last century or so, a phenomenon known as the Flynn effect. https://t.co/sCZvCst3hw (N ≈ 4 million)
(Note that the Flynn effect shows that IQ isn't 100% genetic; it doesn't show that it's 100% environmental.)
4. IQ predicts many important real world outcomes.
For example, though far from perfect, IQ is the single-best predictor of job performance we have – much better than Emotional Intelligence, the Big Five, Grit, etc. https://t.co/rKUgKDAAVx https://t.co/DWbVI8QSU3
5. Higher IQ is associated with a lower risk of death from most causes, including cardiovascular disease, respiratory disease, most forms of cancer, homicide, suicide, and accident. https://t.co/PJjGNyeQRA (N = 728,160)
1. IQ is one of the most heritable psychological traits – that is, individual differences in IQ are strongly associated with individual differences in genes (at least in fairly typical modern environments). https://t.co/3XxzW9bxLE
2. The heritability of IQ *increases* from childhood to adulthood. Meanwhile, the effect of the shared environment largely fades away. In other words, when it comes to IQ, nature becomes more important as we get older, nurture less. https://t.co/UqtS1lpw3n
3. IQ scores have been increasing for the last century or so, a phenomenon known as the Flynn effect. https://t.co/sCZvCst3hw (N ≈ 4 million)
(Note that the Flynn effect shows that IQ isn't 100% genetic; it doesn't show that it's 100% environmental.)
4. IQ predicts many important real world outcomes.
For example, though far from perfect, IQ is the single-best predictor of job performance we have – much better than Emotional Intelligence, the Big Five, Grit, etc. https://t.co/rKUgKDAAVx https://t.co/DWbVI8QSU3
5. Higher IQ is associated with a lower risk of death from most causes, including cardiovascular disease, respiratory disease, most forms of cancer, homicide, suicide, and accident. https://t.co/PJjGNyeQRA (N = 728,160)
