Frequently Asked Questions

Stock Market Basics

• What are warrants in relation to stocks?

• What is a convertible stock?

• How does the process of an IPO work?

• What are stop-loss orders and limit orders?

• What is diversification?

Steps to Successful Investing

• What is the importance of patience in investing?

• Why is it important to use multiple valuation metrics when evaluating stocks?

• What is the Price to Book (P/B) ratio?

• What is the Price to Sales (P/S) ratio?

• What is the Price to Earnings (P/E) ratio?

Fundamentals of great businesses

• Can you explain the three parts of the cash flow statement?

• What is a cash flow statement and why is it important for investors?

• What is the debt-to-equity ratio, and why does it matter?

• Can you explain the concept of the current ratio and why it is important?

• What is shareholders’ equity and what does it represent?

Stock Valuations

• How is the concept of the time value of money relevant to the Discounted Earnings Approach?

• Can more than one valuation method be used to determine the value of a stock?

• Why might an investor choose to use the Book Value method for valuation?

• How is the Price-to-Book Ratio calculated and what does it indicate?

• What does the term ‘Book Value’ refer to?

Whale Stock Investment Formula

• Why is the nature of a company’s business important when examining its financial performance?

• How can you evaluate a company’s growth potential?

• What does the term ‘fair value’ mean in investing?

• Why is sales revenue important in evaluating a company?

• What is meant by a company’s economic moat?

Building your stock portfolio

• How Do We Mitigate Risks With Small Cap Fast Growers?

• How Do We Recognize Small Cap Fast Growers?

• What Are Small Cap Fast Growers?

• How Do We Identify Such Turnaround Chances?

• Why Should We Steer Clear of Scandal-Ridden Stocks?

Finding investment opportunities

• What’s the significance of a company’s five-year chart?

• How should you further assess the filtered list of companies?

• Can you use these screening criteria for International Markets?

• How can stock screeners aid in stock selection?

• Why is the Current Ratio important?

Investor psychology

• Should you follow analysts’ recommendations blindly?

• Why is it important to stay within your circle of competence in investing?

• How does discipline factor into investing?

• How does hard work relate to investing?

• Has Warren Buffett ever cut his losses?

Choosing a stock broker

• Are there any risks involved in choosing a broker offering low commission rates and a small minimum deposit amount?

• Are there brokers that don’t require a minimum number of trades per month?

• Can I use any broker regardless of my location?

• What is the importance of aligning the broker with your investment approach?

• Why is the choice of a broker a highly personal decision?