Sound Advice

Five Stocks To Buy Today It’s getting increasingly difficult to listen to commercials on financial network media.   In all cases, the hook is an ostensibly unusual discovery by the sponsor that would have you believe that they alone have the map to untold wealth.   And, surprise, surprise, for just one phone call, they will be happy to send you, at no cost, information about their latest and greatest extraordinary scam. One of the more amusing examples is the gentleman who can’t wait to tell you about the technique he has developed that, according to him, has generated returns of 5% a month .   Since many investors would be quite satisfied if their portfolios increased by 5% a year , the only reasonable response to this nonsense is controlled regurgitation. Then there’s the well-known West Coast investment company that wants you to know that they are different because they only do better when their investors do better. Not only that, but they don’t charge commissions.   Guess w

Target Prices? Really? For some investors, the temptation to build portfolios by selecting stocks with the highest target prices, compared to current prices, is up there with believing in the tooth fairy. Yet Investopedia, one of the more competent websites, states the following: “When it comes to evaluating stocks, target prices can be even more useful than the ratings of equity analysts. Strictly defined, a target price is an estimate of a stock's future price, based on earnings forecasts and assumed  valuation multiples.” That may be accurate, though neither should be taken seriously.   Let’s consider the merit of each. Current prices for stocks are the products of the following equation: earnings per share (i.e., company net income divided by the number of common shares outstanding) times the price-earnings multiple, which is a numeric valuation of the earnings per share (EPS).   If EPS are $2.00 and the stock sells for 40, the price-earnings multiple is 20. Target pr

What’s a Market Strategist? Funny you should ask.   In plain English, it’s typically a grossly overpaid, pompous man or woman working at a financial institution who pretends he or she has the extraordinary gift of being able to see the future.   These people periodically give forecasts of where the market is going, provide lengthy lists of reasons for these forecasts, and have the enviable record of continuing to spout utterly ridiculous nonsense. Market strategists love to embrace data over extended periods (sometimes from the beginning of time), which they would have you believe has a direct impact on the path they see ahead.   In the interest of appearing to cover all the ground in their presentations, they pay homage to the bizarre “field” of technical analysis, the value of which approximates the lowest of negative numbers.   Speculation based on price patterns of stocks is voodoo, nothing more. Rather than swallowing these periodic regurgitations of rubbish, one would be fa

All About Penny Stocks Penny stocks refer to shares of small companies that trade at low prices per share, typically under $5 in the U.S.  These stocks are often associated with small-cap or micro-cap companies with relatively low market capitalizations (stock price multiplied by the number of shares outstanding).  Here are some key points to know about penny stocks: Low Price and Market Capitalization: Penny stocks have a low price per share, making them accessible to investors with limited funds.  The low market capitalization also means they are generally more volatile and less liquid than larger, more established stocks. Higher Risk and Volatility: Penny stocks are considered speculative investments and carry a higher level of risk compared to more prominent, well-established companies.  Due to their small size and limited financial resources, penny stocks can be more sensitive to market fluctuations and company-specific ne