Whether you are a disciple of Ben Graham, a value investor, or a growth or momentum investor, you can agree that a stock;s price must relate to its financials.
From time to time investors ignore basic numbers like book value, cash flow, interest, and various ratios that fundamentally value common stock. It is especially common during periods of exuberance or fear that investors depart from the fundamental methods of successful investing.
A sound understanding of how to read the basic financials should keep investors focused and thereby avoid costly mistakes, and also helps to uncover hidden values of the stock market.
Ben Graham's principle of always returning to the financial statements will keep an investor from making huge mistakes, and without huge mistakes the power of compounding can take over.
From time to time investors ignore basic numbers like book value, cash flow, interest, and various ratios that fundamentally value common stock. It is especially common during periods of exuberance or fear that investors depart from the fundamental methods of successful investing.
A sound understanding of how to read the basic financials should keep investors focused and thereby avoid costly mistakes, and also helps to uncover hidden values of the stock market.
Ben Graham's principle of always returning to the financial statements will keep an investor from making huge mistakes, and without huge mistakes the power of compounding can take over.
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