Online Stock Trading Tips

Based on experience, below are the top list of money wasters you should be avoiding. The below list are common and practically applicable to common life.

The money wasters are based on the principle of needs vs wants. It means that what is NOT necessary in life already belongs to “luxury” aspect.

Needs vs wants also differentiates the “value” you can get in any item vs “price”. More of these examples will be listed below. I also suggest alternative on cutting costs to make this list more complete. (more…)

If you are stock investor, knowing what is PE ratio is a must. Actually this is called as:

P/E ratio or Price to Earnings Ratio = price per share / annual earnings per share

So if a price is trading at $36 per share and the annual earnings per share is only $2, it means that the:

Price to Earnings ratio = $36/$2 = 18

Some brokers or investors tempt you to buy along with them if the stock has a high PE ratio; it is because it seems to be a “good” investment. Frankly, it is either good or bad. And this is the truth. Why?

Below are the important things you need to know about PE ratio and how it should relates to your investing strategy:

Point #1: There is no such thing as “high” PE ratio; it needs to be compared with the “average” PE ratio of the industry sector where the company belongs.

So if the average PE ratio of the industry sector is 20 and the company PE ratio is at 15, then it is below average. So it is not considered as “high” PE ratio.

Point#2: If a company has a PE ratio of way above 25% than the industry average PE ratio, then it is considered as the best “candidate” for a good long term investment.
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