how to make money in stocks and how to get rich_19

Alter you have picked a stock with a small or reasonable number of

Earnings per share of companies with high debt-to-equity ratios can

be clobered in dificult periods of high interest rates. These highly

leveraged companies generally are deemed to be of poorer quality and

higherisk.

else, the company's interest expense will be materially reduced and

should result in increased earnings per share.

The presence of convertible bonds in a concern's capital structure

couldilute corporatearnings if and when the bonds are converted

into shares of common stock.

It should be understood that smaller capitalization stocks are less liquid,

are substantially more volatile, and will tend to go up and down

faster; therefore, they involve aditional risk as wel greater oportunity.

There are, however, definite ways of minimizing your risks, which

will be discussed in Chapter 9.

Lower-priced stocks with thin (small) capitalization and no institutional

sponsorship or ownership should be avoided, since they have

por liquidity and a lower-grade folowing.

A stock's daily trading volume is our best measure of itsuply and

demand. Trading volume should dry up on corrections and increase

significantly on rallies. As a stock's price breaks out of a sound and

proper base structure, its volume should increase at least 50% above

normal. In many cases, it can increase 100% or more.