Investing 101
Investing 101
I created this section for people who want to learn more about finance & investment, but don’t know where to start. This is a good start. From there, you’ll decide where you want to head toward the financial world. Good luck and don’t forget to have fun!
To-do list:
Goal: Build a strong finance vocabulary and understanding of concept
Investopedia is your best friend.
Action: Watch video on youtube or google it ” …”
Basic Finance concepts:
Open a self-direct account, trade order, Type of investment accounts, Settlement date,
Time value, Compound interest, Calculate Returns,
Equity (Stock), Fixed income (bond), cash, High interest saving account, Mutual funds, ETF,
Index investing, Active investing, Robot-advisor,
Popular index: S&P 500, DJI, TSX, VIX,
Stock exchange: NYSE, NASDAQ, TSX, TSX Venture,
Portfolio management: Asset allocation, Stock picking. Portfolio Rebalancing,
Global Industry Classification Standard (GICS): https://www.msci.com/gics
Fundamental analysis, Technical analysis
Dividend stocks, dividend ex-date, Earnings call, IPO, Safe-haven (Gold),
Tax for investment: Capital gain, Dividend tax credit, Mutual fund distributions, Interest income,
Market correction, Dollar-cost averaging,
Economics:
Demand and supply, Economic cycle,
Inflation, Interest rate, Oil, Gold, FX,
Macroeconomic factors, Fiscal and Monetary policy
unemployment rate,
Yield curve, Quantitative easing, Repo market, Exchange Rate (FX)
Major Economic Crisis: Housing crisis 2008, dotcom bubble, 1929,
Advanced:
Financial statement, Financial Ratios, Intermarket analysis
Margin account, Options trading,
Valuation model: DDM model, DCF model,
Finance theory: NPV, HPR, Market efficiency, Diversification, Behavioural finance
CAPM, WACC, Fama French three factor model
Books to read:
– Beat the bank – Larry Bates (Cost of mutual funds and self-investing)
– The little book that beats the market – Joel Greenblatt (Value investing)
– The little book of common sense investing – John C. Bogle (Passive investing)
– The Motley Fool Investment Guide by David&Tom Gardner (Basic knowledge)
– The neatest little guide to stock market investing – Jason Kelly (General investing)
– The rules of wealth- Richard Templar (Defining wealth)
– In Pursuit of Wealth: The Moral Case for Finance – Yaron Brook (Morality with finance)
-Smart Skills: Mastering the Numbers by Anne Hawkins (easy to understand accounting)
Other books to explore:
– Think and Grow Rich – Napoleon Hill
– Rich Dad Poor Dad: What The Rich Teach Their Kids About Money – That The Poor And Middle Class Do Not!
– The intelligent investor – Benjamin Graham (Value Investing)
– Why Stocks Go Up and Down by William H. Pike (Basic knowledge)
– Advisor Seeking Knowledge: A Comprehensive Guide to Succession and Estate Planning by Peter J. Merrick
Movies to watch:
Movies/Documentaries: Margin call, The big Short, Insider Job, Wolf of Wall Street, Money Monster, Tulip Fever, The Founder (Mcdo CEO), Jiro Dreams of Sushi, The Social Network (Facebook), The facebook dilemma (2018), Steve Jobs (2015), Index funds The movie (2018), Wall Street (1987), How to win the loser’s game (2014),WeWork: Or the Making and Breaking of a $47 Billion Unicorn (2021).
Drama: Legal High (business law), ZENI NO SENSOU War of money (Shark loan), Rich men poor women (Jdrama on tech startup), 上海女子图鉴 (women in Shanghai),金牌投资人 (Excellent investor)
Videos:
· William Ackman: Everything You Need to Know About Finance and Investing in Under an Hour
https://www.youtube.com/watch?v=WEDIj9JBTC8
· Stock investing life buffet: https://www.youtube.com/playlist?list=PLECECA66C0CE68B1E
· Economic concept review: https://www.youtube.com/watch?v=LCRNI04tnN8
· Economic machine: https://youtu.be/PHe0bXAIuk0?si=1CYbQnwCoZvt3F2j
· Warren Buffet Secret Millionaire club
· Warren Buffett – HBO Documentary 2017
· Interest rate increase: https://www.youtube.com/watch?v=4XYlQ_HbDTw
News to follow:
Daily: CNBC, Finviz (News/ Futures), Bloomberg news, Globe and mail, WSJ
Weekly: The Economist
*Outline.com: Read news without ads
Once in a while look at their “insights” publications or commentaries: Goldman Sachs, JP Morgan, PWC, Deloitte, KPMG, Ernest & Young, Mckinsey, (Any mutual fund companies you hold), Guide to the Markets (JP Morgan), PWC real estate,
Others: CNN Money, CNBC, Business News Network (BNN), Financial times, Investor business daily, Value line, Morning Star, Wall Street Journal, Barron, Kiplinger, Motley fool, etc.
People to follow:
Warren buffet
Short seller: Citron Research (Andrew Left)
Michael Burry (Big short)
Ray Dalio, Jeffrey P. Snider, Peter schiff
Finance tools to know:
Financial calculator
Microsoft Excel (Expert level) + VBA skills
Yahoo finance, Bloomberg
Morningstar (Mutual funds)
Thomson one, Capital IQ
Stock simulator
Financial modelling
Trading view, Stock charts
Other tools recommended by AlphaShadow:
Finviz : Futures and news
Simply Wall St: Value investing screening tool
Stock Row: quick snapshot information of financial information
Tipranks: Analyst recommendations
Things you can do to land a job in Finance:
Pre-interview projects: the idea is to do a project that is related to the position you want to apply for
· e.g.: You apply for Equity research Financial analyst. You show they how you evaluate a company with a DCF model.
Read read read and read more.
Bloomberg Market Concepts Certificate
Open a TFSA investing account and trade, show your strategy
Wallstreet summer program: http://www.drew.edu/undergraduate/areas-of-study/summer-term/the-wall-street-summer-program
Wall Street Prep financial modelling (or just watch financial modelling video on YouTube)
Join finance association or investment club
Trade simulator
Trading competition and Investment case competition
Do you own Equity research; post blog, etc.
Mutual funds research : Morningstar and Globefund
Choose market leader for each classification:
· https://en.wikipedia.org/wiki/Global_Industry_Classification_Standard#Classification[4]
Read a Financial report from a company you want to buy
Good starting courses:
CSC: Canadian Securities Course
CIFOC: Canadian Investment Funds Operations Course
Certification:
CFA: Chartered Financial Analyst
CMT: Chartered Market Technician
CIM: Chartered Investment Manager
CFP: Certified Financial Planner
CPA: Certified Public Accountant
CAIA: Chartered Alternative Investment Analyst
FRM: Financial Risk Management
Other skills:
Excel, VBA (Macros), PowerQuery
SQL, Python
FMVA (Financial modelling certificate)
“There is always something to do. Grow stronger everyday.”
Investing concepts we learn but tend to forget:
(1) Lower cost, means more return in your pocket.
· e.g.: Mutual fund fees vs ETF fees
Other fees: trading fees, advisor fees, Tax, tools, magazine subscriptions.
· Bias: “You get for what you pay.”
(2) Risk – Reward relationship: High reward = high risk
· Comparing funds => use Sharpe ratio
(1 unit of risk, how much % return)
· If you want to beat the market, you need to take more risk. Do you need that additional risk?
(3) -10% lost is not equal to a 10% gain.
· Because the new based value you use to calculate the new return is lower. Therefore, it’s better to not lose money.
· E.g.: At $100, lose 10% = $90.
Take the $90, gain 10% = $99
$100-$99 = $1 “missing”
· e.g.: Risk with Leveraged/reverse ETF.
(4) Reversion to the Mean:
· E.g.: Stock spikes or fall, it will go back to the average over time.
· Anything that irregularly goes up, will go down. The opposite is true too.
(5) The past doesn’t determine the future.
· e.g.: A strategy that worked before won’t necessarily work in the future. Past performance are not indicator of future performance.
(6) Asset allocation > Stock picking:
· “How much did you put in the winning basket?”
(7) “Effective Yield” > Dividend Yield :
https://www.dividend.com/dividend-education/40-things-every-dividend-investor-should-know/
(8) Market cap:
Mega/Large cap:
· Long history and “Too big to fail” bias
Small cap:
· Big funds can’t get in easily without affecting the price
· Management money is tied into performance of the company
Mid-cap:
· Potential to become large cap
SimpleLifeBalancing.