Wednesday, February 5, 2014

Investing for Survival

  Investing for Survival

Focus on the 5 Things That Really Matter

by Barry Ritholtz 
1. Valuation: How are stocks valued? Are they cheap or are they expensive? (Keeping in mind that cheap stocks can get MUCH cheaper, and expensive stocks can get MUCH dearer).
2. Trend: What is the economy doing in sum? Is it expanding or contracting? What is the market doing — rising, falling or range-bound?
3. Inflation: What is the overall trend in inflation? Are prices rising or falling or stable — and how rapidly?
4. Earnings: Are companies able to grow their top and bottom lines?
5. Credit: What is the cost and availability of credit?

There are lots of other elements we can talk about — but if you understand these five things and get them more or less correct, you are ahead of 90% of your fellow investors.

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