Good morning. Its the last day before the weekend and you know what that means. Today’s the day I give you tips about investing. There are a lot of mistakes that people make when it comes to investing, especially when they are just getting into it. So i have been looking for ways to help people avoid these mistakes.
I found a great article on the Motley Fool website that I know you guys are going to find useful. Below I have included one of the mistakes to avoid when investing from the article.
2. Falling in love with one ratio
Aren’t ratios fun? Investors love playing with them and talking about them. Many financial writers I have worked with have also had their favourite ones too, whether it’s the PEG (price-to-earnings to growth ratio) or the price-to-book value. Personally, I like the good old-fashioned price-to-earnings (P/E) ratio, but I’m well aware that it’s not the only game in town. In my misspent youth, I spent a lot of time looking at biotech companies, for which P/Es were generally useless as a gauge because most of the companies in question had no earnings to speak of.
Don’t fall in love with one ratio — or indeed any batch of ratios — and believe that it’s the investment holy grail. A ratio is merely one among many tools that can help you come to an investment decision, and looking at it in isolation is no substitute for going through the company’s accounts and researching its future prospects.
If you are getting into investing, make sure that you read this article and avoid making these mistakes. Otherwise you may discover that you are either losing money or that you are missing a lot of great opportunities. Either way, you are going to regret the mistakes.
We have come to the end of another week and the next couple of days I will be posting articles about marketing. Have a great weekend and I will continue with my financial topics starting next week. Thank you for reading my blog and please let other people know about it.