He has 7 financial baby steps, here is the list of all 7 with explanations:

1. The first thing you need to do, according to Dave Ramsey, is set up a small, $1,000 emergency fund. This is a vital step and I agree with it. Everyone needs at least a small amount of money tucked away in case of disaster, you do not want to have to rely on payday loans or anything that is even worse financially.
2. Pay off all debt by using the debt snowball. Pay off the smallest debts first and the largest lasts. Many debate about the debt snowball and its worthiness but as long as you are committed to paying off your debt it does not matter too much how you pay it off.
3. Save 3-6 months of your expenses in an emergency fund. This is a real emergency fund and you will thank yourself for doing this. You will be amazed at the piece of mind you will get from having all expenses paid for almost half a year in case of disaster.
4. Invest 15% of your income in an IRA. I agree with this but I think you should not limit yourself at 15%. Invest as much as you can, it is possible to invest 30%+ of your income!
5. Fund your child’s college education.
6. Pay off your home early.
7. Build wealth and give!

These steps are not rocket science, which is what makes them so great. If you follow all 7 of Dave Ramsey’s baby steps you will be in great shape financially.

Certain companies react differently to inflation, and rightfully so, every company is different. With inflation comes the rise in interest rates from the federal reserve to try to temper inflation, this can cause a negative effect on the economy and the financial sector as well.

Personal wages generally lags the rate of inflation when inflation is abnormally high, so you do not want to own companies that are very sensitive to consumer spending in periods of high inflation. This includes companies in the casual dining industry and retail companies.

When inflation is high it usually foretells a tough economic environment. In tough economic environments you want to be invested in solid, dividend paying, bread and butter companies. AT&T, Coke, Johnson and Johnson, Proctor and Gamble are great examples, there are plenty of other examples as well.

How inflation effects stocks is unknown depending on the situation but you must have a game plan to capitalize on any economic situation.

A company that is trading at 20 dollars a share and has 1 million shares is worth 20 million dollars, see how simple it is to calculate the market cap of a company!

Stocks that have a market cap of under 100 million are considered very small cap stocks, which means they are very small, volatile, and hard to get information on. These stocks tend to be very risky and do not make very good long term investments in my opinion.

Stocks that have a market cap of between 100 million and 1 billion are considered small cap companies. They are small, but large enough to get plenty of financial information on. Small cap companies tend to get the best returns over time.

Mid cap companies are defined as being between 1 billion and 10 billion dollars in market capitalization. These companies are big and recognizable but they still have plenty of room for growth, which puts them in an enviable position.

Large cap companies are 10 billion+, according to me at least. These companies are very recognizable to the average guy and are very mature.

The largest company in terms of market capitalization is Exxon Mobil, which has a market cap of 320 billion currently. That makes Exxon the most valuable company in the world!

Stocks that are trading at a price so low are usually either going to be compelling bargains or companies that are falling apart.

You can go here to check out all of the stocks that are at a 52 week low currently. At the moment, there are 199 companies that are at a 52 week high and just 5 companies that are at a 52 week low. It is very common for there to be a huge discrepancy in the number of companies on their 52 week high/low depending on how the broader stock market indices have faired over the past couple of weeks.

The Dow is nearing a 52 week high currently and as they say, a rising tide lifts all boats.

There are plenty of reasons to be interested in stocks that are at their 52 week lows, I am all about buying quality companies at cheap prices, but you need to shift through all of the “trash” to get to the quality companies. Stocks get to a 52 week low for a reason, it is important to keep that in mind.

The trailing price to earnings ratio is not as popular of a measure to evaluate a company but it is still important.

The only difference between the trailing price to earnings ratio and the normal price to earnings ratio is… you guessed it, the trailing price to earnings ratio uses the earnings from the previous year that the company had to calculate the number.

The trailing price to earnings ratio is a great complement to the price to earnings ratio of a company. You will be able to see how the earnings of a company in the past compares to the earnings the company is bringing in currently.

EBITDA stands for Earnings before interest, taxes, depreciation, and amortization.

EBITDA can be a great way to measure a companies performance. Most novice investors just see a companies earnings for the quarter and do not delve any deeper. Taxes could have risen or fallen, interest rates could have changed… Plenty of things can alter a companies earnings number other then their actual business.

As an investor you want to understand a companies core business and realize that the actual success or lack thereof the business has will end up determining the success of the companies stock and your investment.

Taxes matter, Interest matters, depreciation and amortization all matters, but they mean little when compared to the core business of a company.

The book value of a company is simply how much they are worth at this time. It does not take into account a companies future or potential earnings, it how much assets they have minus the liabilities a company has.

The price to book ratio is the price per share divided by the book value per share. The price to book ratio for a company can be anywhere between 1-10+. Safer, “value” companies tend to stay around 1-3 and riskier higher growth companies tend to be above 3 in the price to book area.

It is very rare to find a company with a price to book ratio below 1. This would mean the company is trading below what it is intrinsically worth. Which hardly ever happens.

The price to book ratio for a company is easy to find on a financial website and it is pretty easy to calculate. It is a good barometer for what type value you will be getting by investing in the company. It is not the only thing you look at but it is definitely one of the main things you should be looking at.

The PEG ratio is not the be all and end all of stock research, but it is an important indicator of the “value” you would receive by investing in a specific company.

If a company is trading at a 15 price to earnings ratio and is predicted to grow its earnings at 10% in the next year then its PEG ratio is 1.5. 15/10= 1.5.

I make use of the PEG ratio of a company when I am evaluating stocks. If a companies PEG ratio is above 2 for some reason or well below 1 then I know something is probably off. The stock market is usually a finely tuned machine when it comes to evaluating the fair price for a company.

Do not overlook the PEG ratio of a company but do not put any more significance on a companies PEG ratio then its worth.

The volume is just the number of shares that are traded of a specific company in a day. If a 10 dollar stock had 500,000 shares traded in a day that means 5 million dollars worth of investment traded hands in one day for just one company.

It is very humbling to see how much money in investments passes through hands each day at the New York Stock Exchange. Trillions and Trillions of dollars really helps one to be able to put things in perspective. But I digress.

If a company is trading at a much higher level of volume over the past couple of days compared to what it usually trades at, then you know something is up. That means that much more money has been flowing through the stock than usual which means someone knows something.

1. CNBC.com: CNBC is a good television channel to watch stock news and commentary and it is also a pretty good website. The best thing about cnbc is the stock screener they have. They have pre-built screens if you are new to looking at stocks or your can do a custom screen. I like to look for mid cap companies that are growing and have good balance sheets and then go from their.
2. Mornginstar.com: I am actually not a huge fan of their “star” system for stocks or mutual funds. If a mutual fund does not have 5 stars then it does not mean that you should be forbidden to invest in it. However Morningstar is a quality website with tons of free quality content related to the stock market. You can also get quotes on companies and do plenty of stock research.
3. Stockpickr.com: A great website. You can do plenty of individual research on companies here, but the best part about the site is that you will have access to thousands of quality articles written about stock market investing. It is a great site for intermediate to advanced investors.
4. Seekingalpha.com: This is a great website because it is different. Seeking alpha allows individuals to publish their own opinions on the economy and individual stocks. Many articles are complete garbage and should be disregarded but there are still dozens that come out each day that are great reads.
5. Yahoo Finance: This is my favorite site to do company specific research on. I love to look up stock quotes, see analysts estimates, PE ratio’s, balance sheets, cash flow statements… of companies. If you want to do research on a particular stock and look up stock quotes this is the site for you.