Understanding the Stock Market - How Do Stocks Work
In this chapter about understanding the stock market I am not going to explain the basic
terminology used in fundamental analysis, like intangible assets, net current assets and current ratio, as
I believe most investors are familiar with this type of terminology. For those who are relatively new to
fundamental analysis I recommend you to read the book: The Interpretation of Financial Statements
from legendary investor Mr. Benjamin Graham, in which these common terms are explained very clearly. More
information about this timeless guide to interpreting and understanding financial statements can be found by
clicking this link.
To help you with understanding the stock market, I have created 4 articles so far. The Dow
to Gold Ratio and the S&P 500 PE Ratio help you to determine how the overall
stock market is priced while the January Effect explains why the stock market reacts like
it does. In My Stock Market Analysis you will read why I believe the best investment
options can be found in the energy and mining sectors.
How the Price Earnings Ratio Helps You to Valuate the Companies in the
Standard and Poor 500.I explain how the S&P 500 PE ratio determines if the
current valuation of the stock market is expensive or cheap, and where today's value can be
Why I Believe the Best Investment Options Can Be Found in the Energy and
Mining Sectors.In order to exemplify some of my insights, I present a summarized
version of my stock market analysis in this article.
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Jeroen Snoeks is the founder of UndervaluedEquity.com, a website for
investors passionate about investing in undervalued stocks. ThroughUndervaluedEquity.com, he shares his
experience and knowledge and will soon reveal his personal stock portfolio.