Home » Blog » Tips from Peter DeCaprio about how to determine the correctness of share prices and evaluate their potential

Tips from Peter DeCaprio about how to determine the correctness of share prices and evaluate their potential

Peter DeCaprio

Trading in stocks is not for everyone because of the uncertainties about the returns, which do not suit those seeking assured returns. Losses are inevitable when trading in the stock market. Still, a good understanding of the chosen stocks’ prospects can help reap the rewards when the time comes, confirms Peter DeCaprio. How well you can read the situation, the worth of the stocks, and its potential contribution to your success in trading. Moreover, you must know the market operations and be familiar with the trade tricks that develop with experience and only after making losses, which you should be ready to accept.

Good preparation is necessary to start trading in stocks to understand what is happening and why.  Proper market analysis should help to make the right decisions at the right time. A lot depends on the appropriate timing of your decisions about buying and selling stocks because the market situation changes so frequently that opportunity comes and goes in a flash.

The factors that drive your decisions about investing in stocks will become clear from this article.

Stock price

Following the major stock exchanges like the NASDAQ (National Association of Securities Dealers Automated Quotation System) and the New York Stock Exchange (NYSE) regularly will help you keep a tab on the market and any specific shares that you target. Peter DeCaprio says whether you invest in shares or any other asset class like a commodity. Real estate, or mutual fund, the stock’s price is a primary consideration for investing. As the price is the baseline of your investment, it demonstrates the stock’s potential that impacts your choice. Analysis of the stock price and its movement over a period reveals. Whether the stock has enough potential to live up to your expectations.

The fundamental rule of trading is to buy shares or stocks when the price is low. And hold on to them before selling them at a higher price. That matches the price you have in mind. Avoid buying stocks that are too much unstable. As they could erode your investment instead of allowing you to gain from it.

True asset value

Investors in the share market attach importance to the intrinsic value of shares on which they base their decisions.  Every stock or share has some value built into it by default. Which in market parlance is the intrinsic value of the share, also known as actual value explains Peter DeCaprio. True value reflects the net worth of the company. Which is the difference between the total assets of the company and the cumulative liabilities. The net worth of a company reveals the company’s financial health. The higher net worth of companies translates into a higher market value of shares.

The enterprise value of market capitalization

Another factor that points to the valuation of a company is market capitalization. Which in simple words means the total value of the outstanding shares of the company.  Market Capitalization reflects how the investors rate the company as the figures point to the overall financial health and size of the company. And the kind of interest that investors take in it.

These tools are helpful no doubt to know how good or bad a company is. But they can even sometimes surprise you.