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Lecture 2- Sum 2018 - BB.pdf
Lecture_2-_Sum_2018_-_BB.pdf
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Lecture 2- Sum 2018 - BB.pdf-MARKET ANALYSIS TRADI...
Lecture_2-_Sum_2018_-_BB.pdf-MARKET ANALYSIS TRADING FINANCIAL LITERACY MARKET
Lecture 2- Sum 2018 - BB.pdf-MARKET...
Lecture_2-_Sum_2018_-_BB.pdf-MARKET ANALYSIS TRADING FINANCIAL LITERACY MARKET
Page 1
MARKET ANALYSIS
TRADING
Page 2
FINANCIAL LITERACY
Page 3
MARKET IS NOT RATIONAL
Making connections where there are
none – market gets into trouble
Fundamentals of the stock, industry,
market…
Page 4
PRESERVE
WEALTH
VS.
BUILD WEALTH
1)
CAPITAL PRESERVATION ACCOUNT
grows with market over long-term (dividends +
capital gains)
2) INDIVIDUAL STOCK ACCOUNT
(simple
stock risk)
Page 5
IT IS IMPOSSIBLE TO GET RICH FROM BONDS … IN THE U.S. MARKET
IN THE LAST DECADE
S&P500 returns ~ 10% over 10 years
RETIREMENT PORTFOLIO
MUST
HAVE BONDS
AND STOCKS combination
Page 6
KEY ISSUES:
Discipline, rules and greed
Trading
vs.
Investing
SWING TRADING
AND
DAY TRADING
Page 7
WHAT WE ARE FOCUSED ON IN THIS CLASS
Currency trading (in class): points/ticks/pips
Equities (individual trading): cents/$
Futures
Commodities
Options (puts/calls)
Page 8
BASIC JARGON FOR TRADING STOCKS
ONLINE
Open an online trading account
ORDER TYPES
Market
(I want it now at any cost)
Limit
Stop-loss
(I want out)
2 types or stop-loss orders: market & limit order
Market stop
= market get out now (no guarantee but you will be out on a down swing)
Limit stop
= I want out but only @ $xx price .
Very dangerous if a bad event happens.
GTC: good till cancel
GTE: good till end of day
LINK:
https
://www.youtube.com/watch?v=DF23jO8Y0n0
Page 9
ETF VS. INDEX FUND:
WHICH IS BEST FOR YOU?
The convenience of an INDEX FUND
frequently
outweighs
other
smaller advantages of an ETF, but here's how to decide which is
best for you !
The difference between an ETF an index fund is not as insignificant as
it might seem.
It isn't just about performance, or which type of fund has the best
returns.
Making the wrong choice could cost you thousands of dollars in extra
fees and commissions and require hours of work on your part.
Page 10
4 MAIN PILLARS IDENTIFYING THE DIFFERENCES BETWEEN
INDEX FUND VS. ETF
-- fees, minimums, taxes, and liquidity -- all of which ultimately determine
whether your best option is to buy an ETF or stick to an index fund.
1. Fees and expenses
2. Minimum investments
3. Tax differences
4. Liquidity
Page 11
1. FEES AND EXPENSES
ETFs generally have a slight advantage when it comes to annual expense ratios. Vanguard, a leader in index
funds and ETFs, frequently charges higher fees on mutual funds than it does ETFs.
EXAMPLE:
Vanguard's S&P 500 ETF
(
NYSEMKT:VOO
) carries an annual
expense
ratio
of just 0.04% of assets. The exact
same fund in an index mutual fund wrapper --
Vanguard 500 Investor Shares
(
NASDAQMUTFUND:VFINX
) --
has an expense ratio of 0.14%, more than three times higher than the ETF alternative. Admittedly, the gap in fees
closes for investors who qualify for Vanguard's Admiral share class of index funds.
Expense ratios aren't the only expenses that matter, however. Because ETFs are bought and sold like stocks,
you will pay a commission to a broker each time you buy and sell, thus negating the advantage of lower expense
ratios. (A
handful of brokers
offer commission-free trading on a select list of ETFs.)
Dividend distributions compound the issue of the differences in how ETFs and mutual funds are bought and sold.
Index mutual fund dividends are typically automatically reinvested commission-free into more index fund shares.
However, when an ETF pays a dividend, you'll need to use the proceeds to buy more shares, incurring additional
commissions and wasted time logging in to your account to make a quick trade.
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George Washington Univers...
George_Washington_University
School:
Global_Financial_Markets
Course:
Great resource for chem class. Had all the past labs and assignments
Leland P.
Santa Clara University
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