More and more households are choosing to build their own portfolio. Picking stocks is more lucrative and more risky than ever before. As long as you hold your positions for a reasonable time, and follow a few basics to investing, you can build a profitable and well rounded portfolio on your own. Think blue chips not penny stocks.
The PE of any given stock is the first thing you look at, even before the price. This 1 indicator can tell you the rough value of a stock before you enter the position. PE stands for price to earnings. The price of a single share vs. the earnings of that share. This should be a positive number, that means the company is profitable. Generally the lower the number the better the value. As long as we're talking well known companies with low P/E you shouldn't go wrong. Lower than a 13 P/E in today's inflated market is an acceptable number. Preferably the P/E should be below 10 before entering a position. This may also be used as an exit indicator. If the P/E is going up it may be a good time to sell as the overall value of the stock is going down.
The Market Cap(Capitalization) of a company is the total value of all outstanding shares. It's a good metric for determining the popularity of a company. It's also a good metric for determining what stage of growth the company is in. If the cap is the largest in the stocks category, it stands to reason, there is little room for growth, yet a market cap below the leader with solid indicators should be a good buy. The bigger the Market Cap the more likely the company is to stay in business. Assets are unrelated to market cap, assets are what the company owns(Supplies, Machinery, Patents). The greater the underlying assets of a company, the greater the stability of price per share.
Beta is a little known indicator that lets you know how the company's price is affected by the general ebb and flow of the market. It's a nice little metric to tell whether the shares are prone to market peaks and crashes. Generaly, the lower the beta, the better the stock.
1 company that stands out in the stock market is General Electric. Their assets include many of the blue chip stocks you should be interested in. Understand GE and their stock metrics, and understand your portfolio better.
