Lecture Notes on Stock and Financial Concepts

Key Terms and Definitions

• Stock: Represents ownership in a company; each unit is called a share.
• Shareholder: Someone who owns stock.
• Stock Exchange: A place for buying and selling stocks.
• Public Company: A company whose ownership is organized via stock shares intended for trading on a stock exchange.

Market Conditions

• Bull Market: Prices are rising (named for a bull's upward attack style).
• Bear Market: Prices are falling (named for a bear's downward attack style).
• Volatility: Speed of stock price movement.
• Volume: Number of shares traded daily.

Financial Concepts

• Capital: Anything of value, often refers to money or assets.
• Liquidity: Ease of entering or exiting a stock, increases with volume.
• Bubble: Inflated prices above actual value due to excessive optimism.
• IPO (Initial Price Offering): When a private company goes public to raise money.
• Dividends: Share of a company's earnings paid to shareholders.
• Blue-chip Stocks: Stocks from well-established companies with a strong history and often pay dividends.

Investment Types

• Forex: Trading different currencies.
• Portfolio: Collection of investments owned by an investor.
• Holdings: Contents of a portfolio.
• Bond: Loan to a company or government repaid with interest.
• Security: Tradable financial instruments (stocks, bonds).

Trading Strategies and Orders

• Going Long: Betting on stock price increases.
• Asset: Resource with economic value expected to provide future benefit.
• Commodity: Basic interchangeable goods (e.g., oil, gold).
• Yield: Earnings from an investment.
• P-ratio (Price-to-Earnings Ratio): Tool for determining stock valuation.
• Market Order: Buy or sell at the best available price.
• Limit Order: Buy/sell at a specific price or better.
• Stop-loss Order: Sell when stock reaches a certain price.

Risk Management and Market Behavior

• Shorting: Betting on a stock price decrease; involves borrowing shares.
• Short Squeeze: Price increase forces short sellers to buy back shares, driving the price higher.
• Panic Selling: Widespread sell-off due to fear, often leading to temporary trading halts.
• Dead Cat Bounce: Temporary recovery in stock price followed by further decline.

Investment Vehicles

• Hedge Fund: Private investment fund using risky strategies, targeting wealthy clients.
• Mutual Fund: Pools assets from shareholders to invest in stocks, managed by professionals.
• Index Fund: Mutual fund/ETF tracking an index (e.g., S&P 500).
• ETFs (Exchange-Traded Funds): Baskets of stocks traded like regular stocks.

Analysis and Valuation Techniques

• Intrinsic Value: Measure of an asset's worth, different from market price.
• Book Value: Value according to company books, what investors would get if assets sold and debts paid.
• Technical Analysis: Identifying trading opportunities through statistical trends.
• Fundamental Analysis: Evaluating actual factors of a company.

Market Dynamics

• Supply and Demand: High demand and low supply increase prices; low demand and high supply decrease prices.
• Insider Trading: Illegal trading using non-public information.
• Ticker Symbol: Abbreviation for publicly traded companies.

Investment Strategies

• Value Investing: Picking undervalued stocks based on intrinsic/book value.
• Growth Investing: Investing in young companies expected to grow above average.
• Dollar Cost Averaging: Investing a fixed amount at regular intervals to reduce market volatility impact.
• Return on Investment (ROI): Profit or loss relative to investment cost.

Financial Metrics

• Profit Margin: Percentage of profit from revenue after costs.
• Compound Interest: Interest on both initial investment and earned interest.

Closing Remarks

• Shoutout to patrons supporting the channel.