investing guide final

Investing Guide

By:Roohi Kazi

Wednesday, 24 June, 15

Stocks

Stocks are also known as equities and can be traded on the stock exchanges. Investors invest in stocks of public companies. Stocks also allow investors to have a share or part of a company by paying a small fee. In return for owning the stock the investor receives a dividend which is a part of the profits made by the company

For example the stocks for MasterCard Inc which is a public company is traded on the New York Stock Exchange.


Market SectorsMarket Sectors are basically different types of companies, in which you can invest in to diversify your portfolio.

You can invest in sectors such as services, technology, transportation, health care etc.

Market Sectors

Services

Technology

Health care

Transportation


Introduction to stocks?What is a stock?A stock basically represents part ownership share of the company.

How to invest? There are various ways to invest in a public company. You can invest through a broker who helps to manage your portfolio. The broker also buys/sells stocks for you. Or you can invest in stocks through a online broker. Sometimes you may be able to buy stocks during its Initial Public Offering (IPO).

Stock Broker IPO


BrokerA broker is an agent/company which helps an investor to buy/sell stocks.

The broker could be a small company or a bank

A broker has analysts who will advise the investor about what stocks to buy or sell.


DiversificationDiversification is a strategy that investors use when buying stocks. Diversification is useful when trying to maximize profits. When you diversify your portfolio essentially you are investing in more than one sector, or across various companies within the same sector. This results in creating a portfolio which has less risk and better return.


Mutual FundsMutual Funds are pools of money from investors collected by the mutual fund company, so as to invest on behalf of the investors.

Mutual Funds can be bought or sold directly from the mutual fund company or through a broker.

Mutual Funds are not traded on Stock Exchanges.

By investing in mutual funds, normal people can use professional money managers, to invest on their behalf.


Types of investors

There are two main types of investors those who do it as a side business and those who do it professionally.

Side Business InvestorsProfessional investor:Jim Cramer


How to select stocks for your portfolio?

You can invest in stocks on the stock markets such as Nasdaq or NYSE. You invest in stocks of public companies.

5. Finally you should make an assessment of the management and if it is operating in the best interests of the shareholders.

1. You should use principals of diversification to decide which sector to invest in.

3. You should consider which companies products are in demand by consumers and will help the company in making a lot of profits.

2. You should invest in sectors that you think will do well in the economy.

4.You should look at the annual reports of the company to asses if the valuation of the company is reasonable,and look at ratios such as P/E ratios,Profitability,Returns,Dividends and Debts of the

company.


ProfitabilityIs the ability of a business to earn a profit. A profit is what is left of the revenue a business generates after it pays all it’s expenses related to how they make their money such as producing the product.


Profitability Ratios

Is a way to measure the businesses ability to generate revenue compared to the amount it spends


How to know when to sell stocks?

1. Company P/E ratio is VERY high(this means that the company is overvalued and after a peak is set to decrease.

2.Competition from other companies in the same sector is growing stronger

3.Changes in the leadership of the company. (Such as a new CEO)4. Companies with falling earnings/sales/profits

5. Dividends have been cut(Not good cash flow,not as much supply and demand for the companies products,innovations)

Adapted from:Nasdaq article:http://www.nasdaq.com/article/wondering-when-to-sell-a-stock-use-this-4minute-checklist-cm205897 and Mr.Munden’s blog


http://www.nasdaq.com/article/wondering-when-to-sell-a-stock-use-this-4minute-checklist-cm205897




How to know when to sell stocks?

1. Company P/E ratio is VERY high(this means that the company is overvalued and after a peak is set to decrease.

2.Competition from other companies in the same sector is growing stronger

3.Changes in the leadership of the company. (Such as a new CEO)

4. Companies with falling earnings/sales/profits5. Dividends have been cut(Not good cash flow,not as much supply and demand for the companies products,innovations)


Some questions to ask when investing

1.What does the company do?2.Is the company profitable?3.What is the companies earnings history and outlook?4.How highly is the stock valued?(does it have a high P/E compared to it's competitors?5.Who runs the company?(CEO,senior executives)6.Is the company's competitive advantage sustainable?


Bearish and Bullish


Bearish

The stock market is down and the investor is pessimistic about the stocks and the prices will fall down.


BullishThe stock market is going up and investors are optimistic about their trades and the cash flow is good.


Compound interestCompound interest is when you put some money into a stock or an index and over time you gain money from the stocks. Over time the interest you gain from the stocks accumulates and your portfolio value increase.


Compound Interest summed up

Compound interest is another strategy to building up your portfolio. Where you put an initial balance,monthly fee,and an interest rate.

For example the Van Guard Index compound interest rate is 16% you put in an initial sum of $3000,every month you pay $100. So your final balance after 7 years would be $24,444,your deposit balance would be $8,400 and your total interest would be $13,044.


Dividends

Companies pay out dividends to all their stockholders yearly. In investing it is a good if you pick companies that have dividends. This means that the company is reputable, there is also a lot of demand for the companies products,innovations and services. It also shows that the company has good cash flow because they have flexibility in the amount they can spend as they have excess money.


What is an index?

A stock index give investors an idea of how the market is doing overall.We are under performing the market S and P 500 ETF because our stocks were not really doing that well.


Example of a stock index

We are under performing the market S and P 500 ETF because our stocks were not really doing that well. We lost a lot of money from some poor investments.


Market Indexes

Market Index’s are used to represent an entire stock market and track the markets changes over time.

Index values are useful for investors to track changes in the index value over time and use it as a benchmark against which to compare their own portfolio returns.


Hot stock Pick AlibabaAlibaba is the leading platform for global wholesale trade though it was launched in 1999 it was only discovered by consumers around the world in the last couple of years. Alibaba is a service which helps buyers find products and suppliers more efficiently and quickly. They also help the suppliers by giving them the necessary tools to bring their products to a more global audience. Alibaba.com has over hundreds of millions of products in over 40 different categories. Alibaba Groups holding which is what we want to invest in, the aim of Alibaba is to build the future infrastructure of commerce they hope to last for 102 years. Alibaba group was founded in 1999 by 18 people led by Jack Ma a former English teacher from Hangzhou, China. The founders used the internet to level the playing field by establishing small enterprises to leverage innovation and technology to grow and compete more effectively in domestic and global economies.

The company is very profitable and has a 218.55 billion dollar market cap. The CEO of Alibaba is Daniel Zhang who is going to replace Jack Ma as the new CEO. Some of the competitors that Alibaba should be wary of JD.Com Inc because it is gradually gaining Alibaba's consumers. Alibaba still remains the unchallenged market leader. Alibaba's business model can be compared to eBay Inc because both companies provide platforms for third party sellers. JD can be compared to Amazon because they are both e-commerce companies that sell third party products and their own merchandise on their platforms.


Alibaba continued:Alibaba has decided to expand their business to the U.S they want U.S Companies to use Alibaba to sell their products into China. Alibaba claimed the record for the largest US-listed initial public offering. They sold more goods by gross value than Amazon and eBay combined. Ma said that "In America e-commerce is commerce. In China it is lifestyle. More than 500 million people will be middle class in China in five years. And they will want good products and services,many of which they cant get now... China must learn how to buy not just import."As far as fake goods being sold on the platform Ma assures us that only one out of every 860,000 items on the site are fake. As far as domestic Chinese brands are concerned,Ma says people are starting to care more about intellectual property. "It's a war and we are getting somewhere. With more people's help,we will win."

Alibaba Group Holdings

Jack Ma

Daniel Zhang

Sources for images:http://www.alibabagroup.com/en/news/libraryDaniel Zhang:http://qz.com/400023/jack-ma-says-its-time-for-alibaba-to-be-run-by-people-born-after-1970/Jack Ma:http://www.ibtimes.com/alibaba-group-holding-ltd-baba-stock-price-soars-after-revenue-leaps-45-daniel-zhang-1912170


http://www.alibabagroup.com/en/news/library

http://www.alibabagroup.com/en/news/library

http://qz.com/400023/jack-ma-says-its-time-for-alibaba-to-be-run-by-people-born-after-1970/

http://qz.com/400023/jack-ma-says-its-time-for-alibaba-to-be-run-by-people-born-after-1970/

http://www.ibtimes.com/alibaba-group-holding-ltd-baba-stock-price-soars-after-revenue-leaps-45-daniel-zhang-1912170




My Stock Picks

Our Stocks:

GameStop Corp. (GME)

AT&T Inc (T)

MasterCard Incorporate (MA)

The Walt Disney Company (DIS)

JPMorgan Chase & Co (JPM)

Chipotle Mexican Grill Inc. (CMG)

Krispy Kreme Doughnuts (KKD)

Microsoft Corporation (MSTF)

Panera Bread (PNRA)

CyberArk Software Ltd (CYBR)


SourcesBearish and Bullish trend: http://www.italkcash.com/forum/news-feeds/104428-what-does-bullish-bearish-mean.htmlB

Bearish and Bullish:http://buzz.money.cnn.com/2014/05/22/investors-leave-us-equities/

MasterCard(MA) Inc stock price:https://www.google.co.in/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=MA+stocks

New York Stock Exchange:http://cfed.org/blog/inclusiveeconomy/cfed_to_ring_opening_bell_at_new_york_stock_exchange_wednesday/

Market Sectors Pie Chart:https://www.google.co.in/search?q=Market+Sectors&espv=2&biw=1440&bih=667&source=lnms&tbm=isch&sa=X&ei=5ziIVe_AKZCpuwTH_obwBw&ved=0CAcQ_AUoAg#imgrc=DCngUSkPtjFyRM%253A%3BuK_VG50tucJIWM%3Bhttp%253A%252F%252Fwww.bloomresearch.com%252Fsites%252Fdefault%252Ffiles%252Fsectorsimg.jpg%3Bhttp%253A%252F%252Fwww.bloomresearch.com%252Fsectors%3B604%3B358

Services:http://www.presidegroup.com/services.html

Technology:https://www.pragyan.org/blog/2015/05/national-technology-day-genesis/

Health Care:http://www.healthdegrees.com/10-hot-careers-in-the-health-industry

Transportation:http://jksafelogistics.com/Domestic%20Transportation%20Services.html

Stock Broker:http://krwfoundation.org/15580-stock-broker-salary-nyse.html/

Initial Public Offering:http://www.greekshares.com/initial_public_offering.php

Stock Broker #1:http://www.tawheedkader.com/2011/09/the-new-york-startup-scene-is-important-but-for-different-reasons-than-you-think/

Stock Broker #2:http://ilformaggionellaroccia.com/9745-wall-street-stockbroker-html/


http://www.italkcash.com/forum/news-feeds/104428-what-does-bullish-bearish-mean.html

http://www.italkcash.com/forum/news-feeds/104428-what-does-bullish-bearish-mean.html

http://buzz.money.cnn.com/2014/05/22/investors-leave-us-equities/

http://buzz.money.cnn.com/2014/05/22/investors-leave-us-equities/

https://www.google.co.in/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=MA+stocks

https://www.google.co.in/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=MA+stocks

http://cfed.org/blog/inclusiveeconomy/cfed_to_ring_opening_bell_at_new_york_stock_exchange_wednesday/

http://cfed.org/blog/inclusiveeconomy/cfed_to_ring_opening_bell_at_new_york_stock_exchange_wednesday/

https://www.google.co.in/search?q=Market+Sectors&espv=2&biw=1440&bih=667&source=lnms&tbm=isch&sa=X&ei=5ziIVe_AKZCpuwTH_obwBw&ved=0CAcQ_AUoAg#imgrc=DCngUSkPtjFyRM%253A%3BuK_VG50tucJIWM%3Bhttp%253A%252F%252Fwww.bloomresearch.com%252Fsites%252Fdefault%252Ffiles%252Fsectorsimg.jpg%3Bhttp%253A%252F%252Fwww.bloomresearch.com%252Fsectors%3B604%3B358








http://www.presidegroup.com/services.html

http://www.presidegroup.com/services.html

https://www.pragyan.org/blog/2015/05/national-technology-day-genesis/

https://www.pragyan.org/blog/2015/05/national-technology-day-genesis/

http://www.healthdegrees.com/10-hot-careers-in-the-health-industry

http://www.healthdegrees.com/10-hot-careers-in-the-health-industry

http://jksafelogistics.com/Domestic%20Transportation%20Services.html

http://jksafelogistics.com/Domestic%20Transportation%20Services.html

http://krwfoundation.org/15580-stock-broker-salary-nyse.html/

http://krwfoundation.org/15580-stock-broker-salary-nyse.html/

http://www.greekshares.com/initial_public_offering.php

http://www.greekshares.com/initial_public_offering.php

http://www.tawheedkader.com/2011/09/the-new-york-startup-scene-is-important-but-for-different-reasons-than-you-think/

http://www.tawheedkader.com/2011/09/the-new-york-startup-scene-is-important-but-for-different-reasons-than-you-think/

http://ilformaggionellaroccia.com/9745-wall-street-stockbroker-html/

http://ilformaggionellaroccia.com/9745-wall-street-stockbroker-html/

Sources

Diversification #1:http://goldiraguide.org/precious-metals-and-the-principle-of-diversification/

Diversification #2:http://206.210.72.218/LightbulbPress/topics/Investing/InvestBasics/pf124/pf124.html

Mutual Funds:http://associates.indiainfoline.com/Products/MutualFund/MFFAQs.aspx

Side Business Investors:http://www.huffingtonpost.co.uk/2013/07/17/work-experience-young-people-jobs_n_3608803.html

Professional Investors(Jim Cramer):http://www.huffingtonpost.co.uk/2013/07/17/work-experience-young-people-jobs_n_3608803.html

Profitability:http://www.interactivenw.com/2012/enhance-your-contact-center-for-profitability/

Profitability Ratio#1:http://www.transtutors.com/homework-help/accounting/analytical-procedures-ratio-analysis

Profitability Ratio #2:http://www.learnmanagement2.com/Profitabilty%20ratios.htm

Bearish Market #1:http://1010wcsi.com/bear-market-ahead-for-june/

Bearish Market #2:http://econintersect.com/b2evolution/blog3.php/2011/08/25/do-you-want-to-ride-through-another-bear-market

Bullish Market #1:http://investir.ch/2014/03/happy-birthday-mister-bull-market/

Bullish Market #2:http://www.dreamstime.com/royalty-free-stock-image-bull-market-graph-image17528936

Compound interest formula:http://www.theautomaticearth.com/2013/06/compound-interest-friend-or-foe/

Compound interest graph:http://betterexplained.com/articles/a-visual-guide-to-simple-compound-and-continuous-interest-rates/


http://goldiraguide.org/precious-metals-and-the-principle-of-diversification/

http://goldiraguide.org/precious-metals-and-the-principle-of-diversification/

http://206.210.72.218/LightbulbPress/topics/Investing/InvestBasics/pf124/pf124.html

http://206.210.72.218/LightbulbPress/topics/Investing/InvestBasics/pf124/pf124.html

http://associates.indiainfoline.com/Products/MutualFund/MFFAQs.aspx

http://associates.indiainfoline.com/Products/MutualFund/MFFAQs.aspx

http://www.huffingtonpost.co.uk/2013/07/17/work-experience-young-people-jobs_n_3608803.html




http://www.interactivenw.com/2012/enhance-your-contact-center-for-profitability/

http://www.interactivenw.com/2012/enhance-your-contact-center-for-profitability/

http://www.transtutors.com/homework-help/accounting/analytical-procedures-ratio-analysis

http://www.transtutors.com/homework-help/accounting/analytical-procedures-ratio-analysis

http://www.learnmanagement2.com/Profitabilty%20ratios.htm

http://www.learnmanagement2.com/Profitabilty%20ratios.htm

http://1010wcsi.com/bear-market-ahead-for-june/

http://1010wcsi.com/bear-market-ahead-for-june/

http://econintersect.com/b2evolution/blog3.php/2011/08/25/do-you-want-to-ride-through-another-bear-market

http://econintersect.com/b2evolution/blog3.php/2011/08/25/do-you-want-to-ride-through-another-bear-market

http://investir.ch/2014/03/happy-birthday-mister-bull-market/

http://investir.ch/2014/03/happy-birthday-mister-bull-market/

http://www.dreamstime.com/royalty-free-stock-image-bull-market-graph-image17528936

http://www.dreamstime.com/royalty-free-stock-image-bull-market-graph-image17528936

http://www.theautomaticearth.com/2013/06/compound-interest-friend-or-foe/

http://www.theautomaticearth.com/2013/06/compound-interest-friend-or-foe/

http://betterexplained.com/articles/a-visual-guide-to-simple-compound-and-continuous-interest-rates/

http://betterexplained.com/articles/a-visual-guide-to-simple-compound-and-continuous-interest-rates/

Sources

Stock index:http://ftalphaville.ft.com/2010/09/03/334116/what-are-stock-index-future-curves-telling-us/


http://ftalphaville.ft.com/2010/09/03/334116/what-are-stock-index-future-curves-telling-us/

http://ftalphaville.ft.com/2010/09/03/334116/what-are-stock-index-future-curves-telling-us/

investing guide final

Presentations & Public Speaking

stocks stocks

stocks of public companies

public company

buysell stocks

mutual fund company

small company

stock broker ipo

mutual funds mutual