Are You Investing or Speculating? Part I

vectorstock_3720867If you are somewhat interested in the stock market and you buy stocks from time to time, it would be extremely beneficial that you become familiar with the difference between investment and speculation. The difference is quite obvious, but it will require us to dig in a little deeper and define both terms. Benjamin Graham defined them like this: ” An investment operation is one which, upon thorough analysis promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.” Continue reading

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Can Schlumberger Withstand This Rigorous Yet Simple Test?

As I was researching a few oil companies and trying to stay on top of all the happenings within the industry, I suddenly realized that I was getting caught in the noise of the market. Oil prices are declining on a daily basis, news flashing are everywhere about a catastrophic hit on energy stocks. It’s tough not to listen to all that madness. I completely forgot about rule no1: ” Don’t pay attention to the Market“. Easier said than done my friends!

 

While reflecting on my profound moment, I decided to stick with the basics and go back to the old school approach. That’s right, I am talking about Benjamin Graham & Warren Buffet school of thought. Therefore I simply took a stand of a Defensive investor’s* approach developed by Graham and consulted my stock software.

*Think conservative, extremely cautious and “play it safe” type of investing.

Here are my findings on “Schlumberger(NYSE:SLB)” using 7 key criteria ( Defensive Investor) approach: Continue reading

How To Read A Stock Data Table

Yahoo data table

  1. Previous close: Closing price of the previous trading day

  2. Open: Opening price of the current day
  3. Next Earnings Date: This is an official day announced by the company where they will hold a earnings conference call to report last Quarter’s results.
  4.  Average Volume(3m): This is an average daily volume traded in the past 3 months.
  5. Market Cap: The total value of the shares outstanding of a publicly traded company.
  6. Dividends & Yield: If the company is paying dividends, the first number will show how much the company is paying per share. Number in () shows a dividend yield and it would be presented as a percentage. Dividend yield tells you what percentage of your purchase price the company will return to you in dividends. Example: If a stock pays an annual dividend of $2 and is trading at $50 a share, it would have a yield of 4%.
  7. EPS: Earnings Per Share is a ratio that tells you how much the company is earning per single common share. Example: If the company’s Net Income is $10M and there is 5M shares outstanding- EPS would be 2 ($10M/5).
  8. P/E: Price to Earnings is a ratio that compares company’s current stock price to its per share earnings. Example: if a company is currently trading at $100 a share and earnings over the last year  were $4 per share, the P/E ratio for the stock would be 25 ($100/$4).
  9. Volume: A number of shares traded on the market daily.
  10. 52Wk Range: A range showing the lowest and highest stock price during the last 52 weeks ( 1 year)
  11. Day’s Range: Daily price range of the stock.