How to Tell When a Stock Is Overvalued

Knowing when a stock is overvalued, and some of the signs that accompany severe overvaluation, can be a fantastic risk reduction tool because it allows the investor to come up with a reasonable future compounding estimate by factoring in how a reversion to the mean, so far as valuation multiples go, would influence the total return.

 

Someone forward you this email? No Sweat! Sign up here to get your own If you're having trouble viewing this email, click here Follow Us How to Tell When a Stock Is Overvalued Knowing when a stock is overvalued, and some of the signs that accompany severe overvaluation, can be a fantastic risk reduction tool because it allows the investor to come up with a reasonable future compounding estimate by factoring in how a reversion to the mean, so far as valuation multiples go, would influence the total return.   Joshua Kennon Investing for Beginners Expert How to Tell When a Stock Is Overvalued For the new investor, there are four quick-and-dirty calculations that can be done to approximate when shares of a company are too expensive relative to earnings.  Let me teach them to you. READ NOW Some Seemingly Cheap Stocks Aren't Cheap At All Did you know that some stocks which appear cheap are, in fact, quite expensive?  Don't be pulled in by an accounting trick or quirk that causes reported profits to be higher than they are long-term. READ NOW Get the Price of Your Investment Right The price you pay for an investment is one of the most important determinations of your ultimate compound annual growth rate but it's something few people discuss outside of value investing circles. READ NOW The Disadvantages of Using a Trust Fund to Pass on Wealth Trust funds can be a great tool for asset protection and tax reduction but they have some serious drawbacks including higher tax rates and costs. READ NOW Featured Articles • 17 Things to Make Instead of Buy • 3 Reasons to Pay More than the Minimum Credit Card Payment • 8 Things You Shouldn't Buy Second-Hand • 14 Beauty Products You Can Make at Home • How to Buy Your Clothes Second-Hand (Without Looking Like You Do) • 7 Small Businesses You Don't Want to Start • Where to Get Help With Your Taxes for Free • 8 Surprising Uses for Dryer Lint Advertisement About Investing for Beginners  |  Follow Us You are receiving this newsletter because you subscribed to the Investing for Beginners newsletter. If you wish to unsubscribe, please click here 1500 Broadway, 6th Floor, New York, NY, 10036 © 2015 About.com - All rights reserved. Privacy Policy.

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