MAKING DECISIONS ON THE STOCK MARKET

Hundreds of people make money each day on the stock market and in that same respect hundreds make losses. All the losses and gains are dependent on the decision they made themselves or with the assistance of their brokers. But either with or without the help of your broker, your gains or losses are uncertain until they are realized. The hedge fund manager George Soros came out with a philosophy that relates to our thinking, how our thinking affects the world around us and the reality. He made clear the fact that our thinking is partial and distorted- name that fallibility- and the distorted thinking tend to affect the situations they relate to since false views lead to inappropriate actions. And he have an example of treating drug addicts as criminals leads to criminal behaviors of drug addicts.

So do investors has to be careful the kind of moves the take on the stock. Its difficult and fatal to predict the market but you can use basic characteristics of companies to choose the right stock.

• Sales
• Advertising
• Management
•  P/B ratio
• P/E ratio and some others we will discuss later

Note: do not follow the masses, do not depend much on the news and rethink about what you broker tells you.
Sales: You can monitor a companies sales and  the sales is very likely to impact on total revenue and translate to profit. For example I calculate the sales of an insurance company I invest in by looking at the number of car per 100 cars I see as a walk along the street that has the starker of the company I invest in. You can also interview vendors of products you are interested in. For example you can ask a FanIce seller how the product is moving for different locations and draw meaningful conclusions.
Advertising: Just as sales, you can easily see how advertising is widespread and how the product is popular among the population. See kids every where playing with their favorite adverts are likely to translate to sale the you know management is doing something right.
Management: Effective management is very obvious in many ways. If management are committed to research and innovation then you know they are doing something right that will in no time pay dividend. Also the management structure tells you if business is likely to do well or not. For example you can easily conclude the bureaucratic leader are likely not to produce results relative to a more decentralized management structure.
P/B ratio: It is simply the price to book ratio of the company. Thus if the price is high the book value the ratio will the greater than 1 which implies the company is selling at a premium whiles if the book value is higher than the price the ratio is lesser than 1 which implies it is selling at a discount. In other words these ratios tell you how investor are valuating stock and it is either over valued or under valued. If management are doing well and other factors are favorable undervalued stock are like to make gains in the future as in investors realize they are doing well. These ratios you can get from to stockbroker.
P/E ratio: This ratio represent the price to the earning which means if the price are too high than the earning the stock makes the ratio is higher whiles if earning are high the prices the be lower. As you compare the ratios of each stocks the lower ones are likely to be preferred. Meanwhile investors should not loss sight of the fact that stock that pay low dividend or no dividend are likely to have flying share prices.  These ratios you can get from to stockbroker.