Jim Cramer: Investing and by doing your homework?

Question

Hello and help,

What does Jim Cramer specifically mean by doing your homework before buying a stock?

Thanks,

Joe

Answer 1

Hello and boo-ya!

Cramer means that you need to do your research and know what you're buying.

Most people (like Cramer) will research the company's fundamentals.

That would include,

o Industry it's in
o What it produces
o Revenue growth
o Sales growth
o Earnings per share
o Accumulation/distribution

and so forth.

These things will help confirm whether the company is a good company in terms of health and in terms of something you feel comfortable holding.

Hope that helps!

Answer 2

Looking at the actual valuation of the stock and the news and the business model, not just buying on somebody's recommendation.

Things to look at are news about the company (are there hints of a scandal, but the news hasn't broken or are there whispers of a big project) or the company's industry (bad news for GM could mean bad news for Ford, or a particularly cold winter means big money for natural gas / heating oil companies).

About the valuation you want to look at earnings per share (EPS) predictions (which is how much profit you can expect to receive, one way or another, on a share of the stock) and whether the company figures to beat or miss the prediction and Price / Earnings (P/E) which is a measure of how "expensive" a stock is. If a stock's price is relatively high compared against its earnings then that means many people think this company has great profit potential, if not, then that means that the stock is priced closer to its current earning potential. A low P/E for a good company could indicate a "cheap" stock.

Other things to consider are how much debt the company has (the more debt, the riskier the investment), a 200 day moving average (200-dma) which indicates the most likely band that the company will be trading within and if the company is near the top of the 200-dma that's a sign that it could break out. Another thing is "institutional support": a lot of individual investors tend to be more emotional and less informed than institutions (banks, hedge funds), so if you see a lot of banks and hedge funds investing in a stock it's a sign that 1) a lot of "professional" investors see good things in the company and 2) even if the individual investors in a company sell their stock you can feel reasonably secure that the stock will stay above a certain level because the really big investors are staying put.

There are a ton of other things to consider, but hopefully this will get you started.

Answer 3

I don't know who Jim Cramer is but I have heard alot of people say that. It means, before you buy a stock, study it and do research on it. Read news on it, look at its past earnings, revenues, expected earnings for the future, etc. Look it up on Yahoo finance and read their info on it. There are other stock websites also. Don't just buy a stock because someone tells you to or because it looks good. Read up on it, you don't want to lose money.

Answer 4

meaning do some research on the stock you want to buy/sell
It is your money, what he meant is you going to take the test without studying for it is failing bad, rather staying home
So research fundamental of the company, how management, business model work that give you the best return on your money

Answer 5

bypass to yahoo finance verify out the agencies profile and key records. study the anaylsts comments and income estimates. you desire a business enterprise who has raised their training over the final 30 days. study the message boards for a experience approximately suggestions-set in the direction of business enterprise. this is a stable initiate.