Diploma in Investment Part I

Transcription

1 Diploma in Investment Part I Lesson 2 Fundamentals Presented by: Francesco Maselli Head of Investment Education

2 Risk Warning Any advice or information provided by the Shaw Academy is General Advice Only it does not take into account your personal circumstances, please do not trade or invest based solely on this information. By viewing any material provided by the Shaw Academy or using any information or tools, you agree that this is general educational material and you will not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here by The Shaw Academy; its employees, directors or fellow members. The investments covered have large potential rewards, but also large potential risks. You must be aware of the risks and be willing to accept them in order to invest. Don't invest with money you can't afford to lose. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material provided by the Shaw Academy. The past performance of any investing system or methodology is not necessarily indicative of future results.

3 Recap From Last Lesson Investing serves an important purpose Different financial markets Market participants Diploma in Investment Lesson 2

4 Today s Lesson Fundamentals Comes to the Stock Market What Drives Price Investor Activity Summary Course Interaction Next Steps Q & A

5 Class Interaction A great thank you for all the comments of our YouTube Channel Some will be revealed at the end of the lesson

6 Coming to The Market How does a Company get into the market?

7 Coming to The Market

8 Capital Markets Primary Market Secondary Market

9 Primary Market Where the issuer directly gets money Requires underwriting

10 Secondary Market Traded between investors Issuing company not involved

11 Shaw Lemonade Co Diploma in Investment Lesson 2

12 Shaw Lemonade Co

13 Shaw Lemonade Co IPO

14 Shaw Lemonade Co IPO Week One: Sold 250,00 5 GBP Per Share Week Two: Sold 250,00 7 GBP Per Share Week Three: Sold 250,00 10 GBP Per Share Week Four: Sold 250,00 15 GBP Per Share We made 5 million GBP in the primary market, they made 9.25 million GBP in the secondary market

15 What Drives Price What Drives Price?

16 What Drives Price? More buyers then sellers = prices rise More sellers then buyers = prices fall The Bulls vs. the Bears

17 What Drives Price? Specific Risk = specific to the investment itself Systematic Risk = effects the overall market

18 What Drives Price? Factors that can make share price rise: - Company has major new contract - Prices for what company does are going up fast - The company has a new director Factors that can make share price fall: - Bad publicity - Company says it will cut its dividend - The company s product range is criticized

19 What Drives Price? Buyers and Sellers Specific Risk and Systematic Risk Investor Perception

20 Market Mechanics

21 Market Mechanics

22 Market Mechanics Highest Bid (Buyer s) Price $12 Spread = $2 Lowest Ask (Seller s) Price $10

23 Market Mechanics Bid and ask price of $5/$5.05 Spread=.05 per share $500

24 Welcome to NYC

25 Lets get some USD

26 Look Familiar? Currency Website says 1 EUR = 1.10 USD Currency Exchange 1 EUR = 1.05 USD Currency Exchange 1 USD =.92 EUR

27 Market Makers (Who Cares?) The Spread Impacts The Price You Pay

28 Market Participants

29 What They Do Momentum Investing Strategy Growth Investing Strategy Value Investing Strategy Income Investing Strategy

30 Analysis EPS = Earnings Per Share P/E = Price Earnings Ratio

31 Earnings Per Share (EPS) Net Income Preferred Dividends Weighted Average Number of Outstanding Common Shares

32 EPS: Company A Net Income = $2,000,000 Dividends = $400,000 Average Outstanding Shares = 200,000 EPS = $8 per share

33 EPS: Company A Net Income = $3,000,000 Dividends = $400,000 Average Outstanding Shares = 520,000 EPS = $5 per share

34 EPS: Company A & B Company A Net Income of $2,000,000 EPS of $8 Company B Net Income of $3,000,000 EPS of $5

35 Company A or B? A or B?

36 Price to Earnings Ratio Current Price of Stock EPS

37 P/A Company A EPS = $8 per share Share Price= $48 P/E = $6

38 P/A Company A Invest $6: $1 Earnings

39 P/A Company B EPS = $5 per share Share Price= $20 P/E = $4 Invest $4: $1 Earnings

40 Company A or B? A or B?

41 Company A or B? Company A = $6 for $1 Company B = $4 for $1

42 Analysis

43 Market Cap Market Capitalization = Company size in the market Market Capitalization = Shares X Price Large companies = Stable/good performance Companies with certain market caps are grouped together in an Index

44 Index USA= S&P 500 Australia = ASX 200 Japan = Nikkei 225 UK= FTSE 100 Philippines = PSE Financials Index Ireland = ISEQ 20 South Africa = FTSE/JSE Top 40 Index France: CAC 40

45 Index Attracts a lot of buying interest Falling out of the index fall hard Roll on effect

46 Stock Markets NYSE: New York Stock Exchange National Association of Securities Dealers Automated Quotations (NASDAQ) TSE: Tokyo Stock Exchange LSE: London Stock Exchange Euronext BM&F BOVESPA

47 Bringing It all together

48 Bringing It all together

49 Bringing It all together

50 Summary IPO What Impacts Price Market Makers Other Market Participants Analysis Market Caps and Indexes Index/Stock Quotes Congratulations you have just laid the fundamentals o Now we can start building on different assets o Attend all of the lessons live to ask Questions in real time and benefit the most o We re here to help, so contact us anytime!

51 To be continued First time float opportunities Worthwhile information

52 Our Next Lesson Stocks and Bonds Equities Fixed Income Attend all of the lessons LIVE and your knowledge will grow Shaw Academy Lifetime Membership Prize during Lesson 6 Recordings are available within 24 hours Go to and then the Top Right Corner Members Area

53 Our new YouTube channel Check out my video

54 COURSE TOOL KIT INCLUDED: Exclusive Starter Pack Webinar Slides for every lesson Summary Notes for every lesson Bonus Videos ONLY 19

55 Q&A Next Lesson is Stocks and Bonds You will learn common stock, preferred stocks and dividends You understand about bonds, coupon payments, interest and yields You will gain the knowledge about different financial markets and what is an asset See local numbers on website