If you sell just ten shares at $11 each, you’ll get more than $2.5 million. The stock markets don’t give back that much money in cash, but they do give back quite a lot of cash in shares.
And in today’s day and age where people can trade the stock markets for free, a market-cap value $3.5 billion is a lot of cash.
On paper, Microsoft shares look like this:
As you can see, MSFT is a strong company with a decent valuation.
But that’s a number you’d be hard pressed to beat.
So how much do you need to trade to reach that valuation?
Well, to find a fair valuation you need to do a fair bit of math.
And that means using your own data.
Now keep in mind, the market as a whole is only a small part of your profits.
And when you’re buying and selling, you need to use data that is a lot broader.
How big of a portion?
I’ll show you how.
And I have some advice to give you – don’t just buy the numbers here and get the deal – if you can, sell it to someone you trust.
Here’s the idea – with data, you’ll be more than a little bit stronger when it comes to evaluating the value of your assets.
But you also put yourself in a position where your money could be spent on things that are likely going to help your business.
And as you’ll see in a minute, there’s a lot of value with companies like Microsoft that don’t use a cash-based valuation.
The Basics of Stock Market Valuation
Here are the fundamentals of how the stock market is calculated.
The market value of a company is computed by multiplying its earnings by the market value of stock.
So, for example – if Microsoft has a market cap of $3.5 billion, and you own MSFT stock, you’ll get a market value of $11 that’s equal to three full shares.
So how does a stock come into play?
Well, the more shares in your portfolio – the better on.
So as we were saying, the more shares you buy, the greater your income (by buying less shares)
And the more shares you sell, the greater your loss (because you sell more
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