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AAII Community Beginning Investor

Beyond the Basics: Evaluating Stocks for Beginners

Discuss your opinions about financial metrics and strategies in the Beginner Investor or Stock Screening communities. What did you find useful and what was not as valuable as you initially thought?

by Jenna Brashear | July 2024

Should you use the price-earnings (P/E) ratio or the price-to-book-value (P/B) ratio to assess a company’s value? What’s the difference between a company’s return on equity (ROE) and return on assets (ROA)? What does free cash flow tell you? Evaluating a stock before deciding to invest can be tricky, especially for beginners. That’s where an online community with many experienced investors can help. Imagine if your child or grandchild came to you with these questions—how would you guide them?

We created the Beginner Investor Community and Stock Screening Community to give members an outlet for discussing their opinions about financial metrics and strategies. These forums help investors improve their financial knowledge to become confident investors.

The two communities work well together. You can find helpful “Investing 101” topics that benefit investors at any level. Members of these communities share their wisdom and experiences about the methods and metrics they find useful—as well as which ones may not be as valuable as they initially thought.

The Stock Screening Community has many discussions on finding reliable stock screening strategies that use financial metrics to narrow down the universe of stocks. Both communities cover common topics to help others gain a foothold in investing.

If you or someone you know could benefit from these conversations, visit https://community.aaii.com, log in with your AAII credentials and join these active groups today!
—Jenna Brashear, AAII Community manager

Join Our Community Today
https://community.aaii.com

Field Notes From the Chapters

A one-legged elderly man trundled around our neighborhood on crutches, unsmiling and uncommunicative save for an occasional grunt that betrayed an Eastern European accent. On a particularly blustery day, my husband slammed on the brakes and dragged the guy into his SUV.

In the few minutes we shared before we dropped him off at his destination, we learned that he had been a Latvian naval diver during World War II. He’d had a wife he dearly loved who died young. We never knew his name, never saw him again. I wonder how he died, stoic in his private grief.

With an average age of 72 and rising, the AAII membership includes many who are vulnerable to the loneliness of advancing age, empty nests, departed cohorts, unfamiliar new domiciles and diminished capabilities. Zoom has done much to support communication, but little to restore camaraderie.

In recent months, some AAII local chapters have resumed in-person meetings: Atlanta, Cleveland, Columbus, Orange County and St. Louis. Other chapters have successfully combined in-person and online meetings in a livestreamed format: Austin/San Antonio, Eastern Michigan, Houston, Los Angeles, Phoenix, Pittsburgh, Research Triangle and San Diego.

Whether clinking glasses or clicking links, our chapters can provide camaraderie over shared interests and pursuits. Join us! 
—Hollis Wagenstein-Hurturk, AAII Chapter liaison

Sign up for Chapters
www.aaii.com/ChapterEmail

See Upcoming Events
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Discussion

JOHN L from NJ posted over 2 years ago:

Investing is unique in that anyone can get very close to average market returns by investing in a cheap index fund. But average isn't good enough for some investors who believe they are or will be better than average through skill or good luck. My advice to those who want to play the stock picking game is that they should bench mark their performance against an appropriate index fund (i.e. small cap index fund if you invest in small cap companies). And if you can't beat the index; join it!


ROBERT A from NC posted over 2 years ago:

John L makes an excellent point. I’ve encouraged my children to invest only in low-expense-ratio domestic equity index ETFs unless and until they understand individual stocks well enough to buy them. But even if they stick with the index funds for life, they will do well. I have outperformed the market by buying and holding good stocks for very long periods, but that’s not for everybody. Individual stocks tend to be much more volatile than funds. Holding a stock through long periods of underperformance can be agonizing, but it is almost essential to reap the highest returns in the long run. Whether you invest in ETFs or individual stocks, staying the course through thick or thin is the best strategy. Frequent buying and selling, especially in response to market "signals," is a recipe for diminished long-term returns. (Just my humble opinion.)


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