WARREN BUFETT

Let's say that a company's stock trades for $100 and that the company has earnings per share (EPS) of $6.50 over the last 12 months. 

We can calculate a trailing ("last 12 months") P/E ratio for that stock by simply dividing the stock price ("P") by the EPS ("E"), so 100/6.50 equals about 1...

• Two recent acquisitions of unrelated businesses look like diworseifications, and the company announces it is looking for further acquisitions “at the leading edge of technology.”

• The company has paid so much for its acquisitions that the balance sheet has deteriorated from no debt and m...

• A stock is a share of ownership in a company.

Ex: When I buy 100 shares of McDonald's, I become a partial owner of the company. I become a "shareholder."

• Stocks move based on the laws of supply and demand. If a lot of people want to buy a stock, the sh...