Introduction to investing in equity: 1.Review of Investing 101

Hello everyone ,

I hope everyone enjoyed the first seminar . This will be a review on what we have covered in the seminar plus additional information.

OK , so , we will start with the reason why you would invest in equity markets at all. If you hold your money in a e.g. saving account your interest rate on money would be somewhere between 0,85 and 0,87 . ( Ally Bank (0,87%) , American Express (0,86%) and Sali Mae Bank(0,85%) ) ,which is a yield that is accumulated annually. There are many investment options if you want to increase your gain. You could invest in bonds, Forex , commodities , mutual funds, Bitcoin , etc. . But , investing in stocks provide you with many advantages. One is that, opening a brokerage accounts do not require investors to spend a fortune on it. In fact, you will need somewhere between 1000 and 2500 dollars to open an account , depending on the broker. However, if you invest more than that your commission on buying stocks will be less. It is good when commission is low because this gives you more flexibility. Let's look at a sample that shows how much you would spend on each transaction depending on the money that you have invested.

Money invested in the acc.	1000	2000	3000	4000
Commission	15$	10$	5$	1$

Money invested in Stock 1	300-15	600-10	1000-5	1200-1
Money invested in Stock 2	300-15	600-10	1000-5	1200-1
Money invested in Stock 3	400-15	800-10	1000-5	1200-1
Money lost in commission	45	30	15	3

If you open an account with 1000$ , this means that you have to pay 15$ each time you buy or sell a stock , which makes you less flexible to react on movements. What do I mean by "flexible"? Well, if you want to maximize profit you will definitely want to be able to buy and sell positions at different times. Here I will give one good example with a graph:

I will show you the advantage of being flexible over your assets. Looking at the graph, you buy 200 shares at the beginning i.e.. 1.30x200=260$ . After that you sell 1.98x100=198$ and you still have positions . This way you will make profit of 1.98x100-1.30x100= 68$ . And vice verse , when the price strike low you can add more positions in your portfolio. However , in order to be so flexible , you need low commission , there are a lot of advantages of that.

As you have already heard ,the companies that you invest in can vary a lot and they could be many industries. You can see the list on most fake platforms such as finviz.com ( the one that we are going to use most of the time ) .

We will primarily focus on US equity market . Just a couple of words to say about NASDAQ and NYSE. The former is the largest stock exchange in the U.S.;it has been found in 1970s ;with more that 3000 listed equities, it mainly includes companies that are more IT based .The latter, NYSE, is again American stock exchange , which has the largest market capitalization in the US. The reason , why are focused on the two stock exchanges is that they have the biggest market cap., which gives one huge advantage- it is easy to find the information that you need. As you will see, there are a lot of articles about all the stickers listed in NYSE and NASDAQ and this will help you substantially for your fundamental analysis.

As it has already been metioned in the first seminar , we will be using a lot of different websides to find what we are looking for ; here I will put some of them just as a good starting point for you:

1. Finance.yahoo.com - this is where you can get a lot of information for financial statements of the company , you can get macro and micro news about a particular sector or just an individual company, you can compare different graphs to find relation between e.g. two competitors - there are many tools that you can use.

2. Finviz.com - maily used for the stockscreener where you can add , here is how the screener looks like :

If there are 6955 , there must be a way to find the profitable one , the speculative one and the divident yielder ... -we will talk about each of the three types in the upcoming sessions. Finviz is also used for finding good news for a particular company from very diverse resources e.g. Forbes , FT , seeking alpha , Reuters ,etc. And also you can use recommendation( underperformed/ourperformed/hold)from financial analysists as a start point of your research. However ,sometimes this can exclude some really good opportunities , so focus on what you see as undervalued/overvalued ,which will come clear with time.

3. Marketwatch.com - it is good for macro news , for example , the top headings that I see today 16.10.14 are "Warren Buffet does not show signs of worrying about this market" , or "If the bull market as a savior , this is what it is - Risk of global deflation ... " or "William Watts: here is what is really behind the market meltdown. " , as you can see all the news are macro oriented .You can aslo see, which markets are opened and closed at the moment and how are the main indexes traded. And here is your first article on QE , something that you will always read about http://www.marketwatch.com/story/bullards-surprising-suggestion-to-continue-qe-lifts-markets-2014-10-16?link=sfmw_fb

4. Seekingalpha.com - it both used for macro and micro news but we are going to use it mainly for the micro news since there are really extensive articles made by thrustworthy analysist and even the president of Surrey Investing Society has already created a few articles for the famous website. You can be notified if there are any new articles for any of the companies on your portfolio or on your watchlist ( stocks that you currently research and you are waiting for major movements in the stock price)

5. Investopedia.com and gurufocus.com - used for terms , concepts and even watchlist of the biggest investors . There are many interesting things that you can learn about the investing world.i strongly recomment these two to be used by beginners as an addition to the books that you are reading . If you do that , I can guarantee you that you can advance really quickly. Investopedia gives explanation of e.g. how financial ratios are formed and what numbers are included in them . Gurufocus is good for e.g. explaing discounted cash flow, book value, business growth rate,terminal value ,etc. . It is really easy to start your research , you just have to start once !

Those were the 6 main websites that we will always use our base for research but there are really many other good resources such as google finance, Financial Market News MNI , Swiss national Bank ,etc.

There are two approaches that we saw in the first session and these are Fundamental approach and Technical approach. A couple of words for the two : the technical approach relies heavily on chart reading , support and resistance lines, candlestick bars ( hammer , inverterd hammer - things that describe the candlestick bar ) BUT , there are things such as SMA ( simple moving average ) we will very often us in our stock screener , there is volatility over the year or over the month . The fundamental approach includes reading financial statements that help to form the financial ratios . There is the current/quick ratio , P/E ratio , debt/equity ratio ,etc. - numbers can be derived from the financial statements.

So, from now on , you are the one who has to come with ideas about your portfolio.I just want to show you the current portfolio of Warren Buffet and to show you that you can see how the famous investors have positioned their assests. You may get some ideas of it - this a good basis for starting research - why would The Investor be interested in that particular ticker.