Wednesday, January 28, 2009

It's Easy Buying A Stake in a Public Company

Here's one of the better explanations I've recently read on the idea of fundamental analysis or "value" investing (from the Ideas Report:
Buying a stake in a publicly traded company is deceptively easy. Log into your brokerage account, type in the ticker of the company whose stock you wish to buy, and—voilĂ !—you own a stake in the enterprise. Many investors don’t even refer to companies by their name; they simply invoke the ticker symbol. The ease with which stocks are bought and sold obscures the underlying nature of a stock market transaction and invites bad decision-making. The trick is to avoid thinking of a stock as a readily disposable piece of paper and instead consider that you are buying a percentage of a business whenever you purchase a share of stock.
Read the whole thing here