This is the third edition of a weekly effort to help on with novice education. You can access the first one here and the second one here. Each video will be about 5-10 minutes (this was 10), with the intention of explaining key concepts in plain English, all with the goal of making you a more informed investor. Going forward, send me a note and say "Basics Question" so that I can answer it in the next video. Remember, we have some info posted here too:
DIFFERENT TYPES OF SECURITIES
VALUING A STOCK
No single or "right" way
"Net present value of future cash flows"
oP/E (Price relative to earnings)
oP/S (Price relative to sales)
oP/B (Price relative to book value)
WHAT IS "AVERAGING DOWN"?
Definition: Adding to initial purchase at lower price
Does it work? Sometimes!
When to do it
oFundamental story intact
oCareful with companies with debt
Please let me know if I wasn't "basic" enough and also shoot me a message for topics next week. Also, note that this is a PUBLIC VIDEO