One of the biggest barriers to investing is the vocabulary. That’s a barrier to a lot of things you might be interested in. The only way to get past that barrier is to educate yourself on the meaning of the words that scare you. Here’s a few that you should know when itcomes to the stock market.
What exactly is a stock? It’s a owning a piece of a company. That’s literally what it means. The company answers to you, the stock owners. You can vote and have a say in the company. They have to do what’s best for you the owner. Finding the best companies of course takes work. You should see the Online Trading Academy Reviews to see about getting into a course that can help you find those companies.
A fancy word for how much all of the stock of a company is worth is Market Capitalization. All you do is take all of the stock that’s owned and multiply it by the price to get the market cap. Why should you know this? Because it helps you to compare similar companies since share prices usually fluctuate.
One of the more important things to know is the Earnings Per Share. It’s the net income divided by the average number shares. Basically, if a company issues a huge amount of shares it can dilute the value of each share. That’s obviously not a good thing so you’re going to want a company with a higher EPS.
Another thing to look into is the P/E which is the Price to Earnings Ratio. It basically tells you how valued a company is by dividing the current share price by the EPS. This also helps you find companies that are under or over valued.
That’s a little bit of the lingo you need to know. Keep learning so you can get into investing. It’s really a great way to grow your money.