[Technical Lounge] – Evaluation Of Shares

by Gagandeep

in Investment Basics

Are you losing your hard-earned money in the share markets or making a little or even less than what you should ideally be? Do you still wonder what people like Warren Buffet, Anthony Bolton know about the market investing strategies that you do not? Well their secret is very simple : They buy the shares from the market for less than they are worth of and then, wait until they appreciate.

Stock picking is primarily about evaluating the potential of a share relative to the price in the stock market.

Business Graph Photo Credit: nDevilTV

When one buys a share as an investor, he actually buys a part of the business, and obviously wishes to buy the share at a price that is below the valuation of the business. In simple words, we want to buy cheap! The challenge for the investor is to estimate the value of the assets and activities that the share represents. Valuation of a share gives the reader the tools required to make complete share analysis and valuations of companies.

Coming to the valuation of shares of a company, there may be a number of reasons for the valuation of shares of which two main reasons are   –

#   where   there is no market price.

#   where in certain cases in   market the true value/market value of the shares in not known.

Usually in case of shares there may be a number of reasons why a company   or share sector is there to evaluate or value its shares.

#   In case the company amalgamates, the company which is being taken over wants to know the exact value of the shares of the company in the market.

# In case where there is a partnership firm and when dissolution takes place both the partners may be interested to know the value of the shares.

#   In case of a loan, where loan is advanced against security of shares, the party or financial institution giving loan may be interested to know the   value of shares .

#   Shareholders, the real owners are the people interested to know the actual present value of their shares.

#   Large units have major stock or overall profitability in form of stocks being owned by the shareholders so it may be helpful at times to shares.

What are your views about the valuation of shares and what practice do you follow to get the best out of the Stock Markets. Share your views in the comment form below.

This is a guest post by Gagandeep Singh who also writes regarding Latest Movies and Movie Reviews at MoviesTemple.

{ 2 comments… read them below or add one }

abhi February 10, 2010 at 10:54 am

Your blog is different than others. Its financial market blog. Good for a newbie like me. 🙂

Reply

Amandeep Singh February 10, 2010 at 12:31 pm

Thanks a lot Abhi 🙂

Reply

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