Here is a rich source of bad information.
The URL is:
webipo.com
Here you can learn, for example,the following bits of knowledge:
Beta: a statistical measure of the risk-level of a stock or mutual fund. The higher the beta, the higher the risk.
The classic confusion of systematic and unsystematic risk.
Cyclical Stock: a stock that performs well during economic recoveries but does badly during recessions. Examples: companies that sell large-ticket items, such as General Motors.
NO. Cyclical is about the earnings, not the stock.
Dilution: When a company issues new shares, this will lower the percentage of ownership for current shareholders.
No, dilution depends on the effect of the share issuance on book value or earnings per share.
Due Diligence: This is when an underwriter makes a reasonable investigation of a company, to see if they are ready to go public.
No, it's more to see if the company's disclosures are correct. When was the last time you heard about an underwriter doing due diligence and concluding the company was not ready?
Fallen Angel: a stock that was once successful, but has recently experienced great financial troubles.
No, I think it just has to have a fallen stock price. The company does not have to have experienced great financial troubles.
Float: This is the number of shares the company has outstanding.
No, float is the shares in public hands after deducting shares that do not trade because they are held by affiliates, insiders, or others who cannot or do not trade them. The definition confused float and market cap.
Fundamental Analysis: a method of valuing stocks by considering financial data, such as cash flow, earnings, sales, market share, debt levels, etc.
This is the historical financial data. It is a pretty small part of fundamental analysis. Fundamental analysis involves judgments and predictions about the future.
Good Will: the intangible assets of a company, such as reputation, brand names, commitment to the community, etc
No again. First, they spelled it wrong. Second, it is the amount paid in an acquisition in excess of the so-called "fair value" of assets. Just because a company has a reputation, a brand name, or a commitment to the community, it does not have goodwill on its balance sheet.
Individual Retirement Account (IRA): a tax shelter, in which the government allows each person to contribute $2,000 annually (of earned income) into an account that has tax-free features.
No, IRA is not a tax shelter. And that's only part of what is wrong with this one.
Insiders: directors, officers and major stock holders, who own 10 or more percent of the company's stock.
So a CEO who owned only 9.5% of a stock would not be an insider?.....
Large Capitalization Stock: a well-known company that has over one billion in market capitalization. Examples of large capitalization stocks: Phillip Morris, General Electric and Wal-Mart Stores.
Actually, a stock with $1 billion market cap would currently be included in the Russell 2000, which is an index of small caps. Then, above that, comes mid cap. And above mid cap comes large cap. And being well-known is not a criterion to be called a large capitalization stock.
Leading Economic Indicators: a statistic reported by the government that tries to predict if the economy will expand or contract.
Actually, the government does not report this any more. They turned it over to the Conference Board, which is not a government entity.
Price-Earnings Ratio (PE ratio): calculated by dividing the stock price by the earnings per share. For example, if a company is selling for $50 and has earnings per share of $5, then the PE ratio is 10 ($50 divided by $5). Many analysts use the PE ratio to indicate if a stock is undervalued (e.g., if the PE ratio is over 5 or 10) or overvalued (50 to 100).
Actually, the PE ratio tells you whether growth expectations are high or low. It does not tell you whether the stock is overvalued or undervalued.
Undercapitalized Company: a company that does not have sufficient cash to run properly.
No, that is illiquid. Undercapitalized is something else.
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Really, I did not make this up. these definitions are really there as of this date. And I only picked some. There were others. |
