Buying Stocks Online - The Large Number of Advantages and Fresh Possibilities it Offers

It's hard to imagine that twenty years ago there was no such thing as an on-line purchase of shares. Before the internet, all you can do is read the newspapers trying to get enough information, and phone your broker if you would like to buy stocks.

The Internet has changed the way we buy stocks forever. In the first place, you can now buy stocks without ever picking up the phone. You can do it from the comfort of our living room in one of the hundreds of online stock trading site. There is still a broker involved, but you do not have to meet him or to get advice from him.

Not only is the manner in which the actual purchase or sale of the changes implemented, there have been many other changes. Probably the biggest change in the market was an amazing amount of information that became available to investors and traders since the Internet appeared on the scene.

for each stock on the market now you can get historical prices, future price projections, expert analysis, company information, financial reports, you name it, "is available on the Internet. The extent can we talk about information overload.

individual investor or trader should develop a system to analyze this information so it makes sense to him before acting on it. You must be able to develop a set of criteria for comparing different stocks before you decide on a particular purchase.

One of the ways to do this is to compare the ratio of stock price to its earnings per share. If the share price / earnings ratio of say 10, this means that the stock sells at ten times the value of annual earnings per share. Another way of looking at it is that the company makes a profit of ten percent of the market value of its shares each year.

Some very popular company stocks sometimes have price / earnings multiple of 200-1. This means that the company 200 years to produce enough profit to cover the market value of its shares. You will surely understand that sooner or later, as the shares could be completely overpriced.

The trick is therefore to find undervalued share of a company in which the price / earnings ratio is still quite low, and we expect the future to get a lot more than it would indicate the stock price. When you buy stocks online, you probably have all the necessary information to find the stocks available 'only need to take time to sift through it.