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Bid/Offer: The Yin and Yang of Stock PricesRead the first part of this post at the link: How is the share price formed on the stock exchange? We do it So at what price and what volume will the deal eventually be made? To understand this, let's go back to the "price" parameter of the order. When a buyer placed an order "to buy 25 lots at $115 a share", the exchange takes it as "to buy 25 lots at a price not more than $115 a share". That is the purchase price can be less than the price stated in the order, but not more. And when the seller earlier submitted an order "to sell 20 lots at $110 a share", the exchange takes it as "to sell 20 lots at a price not less than $110 a share". That is, it is possible to sell at a price higher than that specified in the order, but not less. Once again: buyers always put orders "buy at no more than such-and-such a price", and sellers always put orders "sell at no less than such-and-such a price". So, we return to the situation with the crossing of prices. When the exchange detects a crossover, it begins to execute the order that has caused this crossover. In our case, it is an order for 25 lots at $115 per share. This order kind of "eats up" all sell orders that are on the way to the price of $115 (that is, everything cheaper than $115), until it reaches 25 lots. Which orders were "eaten up" in our case? One single order to sell is 20 lots at $110 per share. What was "eaten" is recorded as a buy and sell trade in what's called a tape. It's similar to the way a cash register punches a check with a price. The record looks like this: FB $110 20 lots However, we have a remainder after the trade is 5 lots, the remainder of those 25 at a price of $115. Since at this price (or lower) nothing can be "eaten", the order remains in the left page of the book until a suitable offer. Let's see how the FB order book looks now, after the deal is done: Let me note again that all orders in the book are sorted in descending order from top to bottom. The concept of "book" is very useful for understanding how the exchange price is formed. In the past, when there were no electronic trading systems, there were so-called floor brokers, who used to collect and record prices and volumes of orders in a real book. Nowadays you may encounter alternative terms like Depth of Market (DOM), Level II, but they are all identical to the notion of an "order book". The orders to buy that we see in the order book are called "bids", and the orders to sell are called "offers". So, in our order book there are two bids and no offers. All bids and offers are called "limit orders" because they have a price limit. But there's also a type of order that we will never see in the book. Why? I'll tell you in the next post.
NSE:RELIANCEEducation
by Be_Capy
How is the share price formed on the stock exchange? We do itYou already know that the stock exchange is a one-stop place to buy or sell stocks, whether you are a novice investor or a seasoned professional. But even if you don't trade stocks, you will still "come" to the stock exchange to find out stock prices. Let's find out how the exchange price of a stock is formed. Regardless of what country the stock exchange is in, the rules for determining the price are similar for everyone. Let us understand how it works, as always, with the help of our imagination. Imagine a large rack of books. Each book has a name on the cover: Apple, Facebook, Amazon, etc. Let's take one of the books, let's say Facebook, and open it. We will see only two pages, and they are both blank. On the left page we will record buyers' orders to buy shares, and on the right page we will record sellers' orders, respectively, to sell shares. So, every day the exchange, when it opens trading, essentially opens such a "book" and records every bid it receives. What should be written in the order? First of all, there must be an abbreviated name of the stock, or, in professional slang, the "ticker," to understand which book to get off the shelf. For example, Facebook shares have a ticker consisting of two letters FB, while Apple shares have four letters - AAPL. Second, the order must indicate the direction of the transaction, i.e. "buy" or "sell". This is how the exchange understands whether to record the incoming information on the left or on the right page of the book. Third, the order must indicate the price per share, so that the exchange can sort the orders in descending order of price from top to bottom. Fourth, the order must specify the volume in lots, that is, how many lots of shares we want to buy or sell. To clarify: Shares on the exchange are not traded by the piece, but by the lot. The lot size is set by the exchange. One lot may be equal to one share, or a hundred, a thousand, or even ten thousand shares (depending on the specific share). This is really handy because the price of one share can be equal to, for example, the price of your computer (then 1 lot may be equal to 1 share), and sometimes 1 share may be worth as much as a box of matches (then 1 lot may be equal to a thousand shares). Why "may be"? The specific rules for determining the lot size depend on the laws of the country and the exchange itself. For example, on the New York Stock Exchange (NYSE), the usual size of 1 lot is equal to 100 shares. So, let's return to our example. Suppose we want to buy shares of FB at a price of $100 per share in the amount of 10 lots. Then the exchange will record the following on the left side of the FB book: 100$ 10 Then there is a seller who wants to sell FB stock at $110 per share in an amount of 20 lots. Then this is what the exchange will record in the right side of the book: 110$ 20 Then there is a buyer who wants to buy FB stocks at $115 per share in an amount of 25 lots. The entry on the left side of the FB book will look like this: 115$ 25 And now comes the interesting part. Did you notice that the $115 price in the last buy order is higher than the single sell order of $110? That means the buyer is willing to make a deal at a price even higher than what the seller is offering. So at what price and what volume will the deal end up being made? Please wait for the next post.
NSE:TATASTEELEducation
by Be_Capy
Picking rules - the Lynch methodBack in 1977, the still famous investment company Fidelity Investments entrusted the management of a small fund of $18 million to this very man. The next 13 years were impressive for the Magellan fund and its manager - the famous Peter Lynch. The fund's assets grew to $14 billion, more than doubling the average annual growth of the S&P500 stock index. When he stopped actively managing assets, Peter shared his approach with the rest of us. Some of his thoughts inspired me to create my approach and may be useful to you as well. 1. The private investor has an objective advantage over institutional investors (e.g., funds) because he is more agile. He is not burdened by the need to coordinate his actions with the management of the company, and his purchase requests are easily satisfied by the market. Agreed, it's easier to buy for $1,000 than it is to buy for $1 billion. Thus, the private investor can catch prices that the big "players" will have a hard time getting. 2. Don't spend everything you have under your belt on stock investments. The trades will not be able to close "in the plus" just by your own volition. So first provide yourself with a financial safety cushion, a stable job and a place to live, and then start investing. 3. Admit to yourself: are you a patient person who is capable of making independent decisions, diving deep into analysis and soberly reacting to plus and minus changes? If not, practice, but on small volumes. 4. Never buy a company's stock if you can't explain what it does and can't talk about its financial performance. The stock market is no place for gambling. There are slot machines, etc., for that. 5. The company works for profit and grows because of it. So keep an eye on everything that affects profits. Evaluate the company not in monetary units, but in the number of profits. 6. Watch where the company invests its profits. If it's mostly capital investments that will probably make a profit someday, in the distant future - think about it. After all, the beautiful future as conceived may not come. If, on the other hand, the company is allocating its profits to buying its own stock, it means that management thinks the current stock price is attractive enough. 7. The success of the stock may be unrelated to the company's financial success. Beware of such investments. 8. A company's financial success may not be reflected in its stock price for a long time. However, the longer the period in question, the more direct the relationship. So if you select companies based on an analysis of financial performance, be prepared to make a long-term investment. To this day, these thoughts help me look at assets consciously and not give in to spontaneous decisions. What do you think of this approach?
SP:SPXEducation
by Be_Capy
2
I dream of entering the stock market. The question is: What for?Read the previous part of the post here . Having received only denials, the owner of the workshop decides the following: it would be great if shares were sold and bought not in the offices of banks, but in one single place - the stock exchange. Then those who want to vote would be able to buy as many shares as they need votes. Those who want a discount will wait until the price on the stock exchange falls to an acceptable level for them. And those who bought one share would be able to sell it at any time at the exchange price. The owner likes this idea and decides to list his shares on the stock exchange. Another term to remember is listing. Listing is the service of the stock exchange to allow the shares to be traded on the stock exchange. Now the shares can be bought or sold in one place, simply by connecting to the stock exchange trading through brokerage companies. The banks, which have brokerage licenses, also liked it. The main thing is that now they do not have to convince clients to buy shares for dubious rights, you can just say that the price at the exchange is constantly changing, and if you buy shares at $ 1000 now (in the bank office), then a month later at the exchange you can sell them already at a higher price. This created a real stir around the company's shares, and they were bought up from banks at the IPO price - that is, at the original price of $1,000 per share. A significant advantage for any investor is the ability to buy or sell shares quickly and easily. That is exactly the kind of opportunity stock exchanges provide. If there were no stock exchange, the owners of shares would have to look for buyers on their own. But now they have the opportunity to connect to the exchange and make a deal at any time. As soon as the stock exchange started trading, the share price of the workshop came to life. This attracted new investors who tried to buy cheaper shares and sell at a higher price. Such investors include you and me. So what we know so far: - A company needs stock to sell a share of its business and get real money. - Shares can only be issued by a public company. - Shares give its owner rights: to vote, to receive agreed dividends, and to receive a share from a bankrupt company. - The initial sale of shares to the public is called an IPO (initial public offering). - During an IPO, shares are sold not on the stock exchange, but through brokers or banks. - The first day of stock trading on the stock exchange is the completion of the IPO process. - In order for the shares to be traded on the stock exchange, the company has to go through the listing procedure. - It is only possible to buy shares on the stock exchange through a licensed broker. - The exchange price is constantly changing during trading. The workshop story may give the impression that we small investors are only being used to get money from us in exchange for unnecessary rights. However, it is important to understand that we are more interested in the opportunity to profit from the growth of the shares than in gaining formal rights. It is this desire that unites all shareholders of a company, whether you have one share or a million. A joint-stock company can be compared to a hotel with many identical rooms. One share is one room. If the hotel is doing great and making a profit, investors will want to buy more rooms, and sellers will want to sell more rooms at a higher price. If the hotel performs poorly and makes a loss, then room owners will get rid of them (i.e. sell even at an unprofitable price to get money and find another hotel that is more attractive for investment). The strategy I will share will be to find, figuratively, great hotels (in fact, joint stock companies) during a room sale (i.e., a period of declining stock). We'll figure out how stock prices are formed on the stock market soon. See you next time!
NSE:BANKNIFTYEducation
by Be_Capy
2
Stock Company. Selling something that no one will buy piecemealSo, here we go. Start of the story here . What next? How will he sell something that no one will buy in pieces? He turns his company into a joint-stock company, which is a form of company organization that allows it to be split into shares. Our owner issues 1 million shares, that is, he sort of divides the company into 1 million pieces. Then he calculates how much his whole business is worth - let's say $1 billion. And if $1 billion divided by 1 million shares, you get $1,000. That's how he calculated the value of 1 share. Recall that our owner has decided to put only 25% of his business up for sale, that is, 250,000 shares. And if we multiply 250 thousand shares by the price of $1 thousand, we get $250 million in total - this is the value of the share of the company he plans to sell. Now he has to decide: will he sell 25% of the shares to one or more buyers, or even an unlimited number of people. First, he was approached by one large investor who has $250 million to buy all 25% shares. But the investor shared with the owner a plan to grow the company and asked him to place his managers in high positions. The owner of the company didn't like it because he didn't want to lose control of the company, so the deal didn't go through. Then he was approached by several investors who promised him they would stay out of the company's business, but were willing to buy a 25% stake not for $250 million, but for only $200 million. That option did not suit the owner either. Then he decided this way: instead of negotiating with big buyers, I will offer my shares to anyone who is willing to pay 1 thousand dollars for 1 share. This offer is called IPO (initial public offering) . Remember this term, because you'll come across it quite often. Our owner had agreed with the banks from which he borrowed money, that for a small commission they would sell his shares at $1,000 apiece to absolutely any buyer. But the first buyer asked the bank the question, "What's in it for me to own one share?" Through this question, we come to the point where we find out what owning stock gets us. The bank answers the prospective buyer that: - You will be able to manage the stock company by voting on matters of the general meeting of shareholders. The weight of your vote will be one in a million votes. - You will be able to receive dividends if a majority of the general meeting of shareholders votes "yes" to pay dividends. - If the company goes bankrupt, you will receive one millionth of its assets left over after all of the company's debts to banks have been paid. The buyer decided he was being mocked and rejected the offer. After all, why should he have the right to vote if 1 his vote means little in the overall background. Why does he need dividends if they may not be assigned. Why would he need property that would be impossible to sell after bankruptcy. But more about that in the next post.
NSE:TATAMOTORSEducation
by Be_Capy
What is a stock? Let me tell you a storyNow let's talk about what a stock is, why companies issue them, and why they attract investors. To do this, imagine a story. Imagine a small shoe workshop with a single owner. Suppose he makes boots out of crocodile leather. His product is unique to the city and in demand, because these boots are very durable and comfortable. At this point, he can only produce one pair of boots a day, and the number of orders for boots is 2 pairs a day. To meet the demand of his customers, he hires an employee and buys twice as much crocodile leather and other necessary materials for the job. With what money? With all the profits previously accumulated. The workshop now meets the demand of two pairs of boots a day. Later, the workshop receives a corporate order for 90 pairs of boots per month. In order to meet the new order, three more pairs of boots must be produced in addition to those two. But with what money to buy so many materials and hire three more employees? After all, even all of the previously accumulated profit is not enough for such a batch. In order not to miss out on a major customer, the workshop owner goes to the bank for a loan. The bank is happy to give him a loan secured by the workshop (which means that if the owner will not repay the loan, his workshop will be taken away). But all goes well, the owner hires three more workers, buys materials, and puts out five pairs of boots a day. With the proceeds, he pays the loan and interest. Now, let's go back to that beautiful day when the shop received an order for 90 pairs. The owner could have declined the loan and waited for the accumulated profit, but to do so he would have had to negotiate with a potential buyer for a longer lead time for the entire batch, and that could have resulted in the loss of the order. What it turns out: he needed the credit in order to ramp up production quickly, and thus the size of the business. Taking advantage of the credit and constant demand, our workshop owner goes nationwide and becomes the most famous manufacturer of crocodile leather boots with many workshops all over the country. And a lot of people around him want to buy the successful business. Then he starts thinking: on the one hand, he has a huge business that is profitable, and on the other hand, he has an opportunity to get money in exchange for workshops, stock of materials, employees' labor, business connections and reputation. In short, in exchange for everything he has created with his own hands and head, which is very difficult to sell individually. He likes the idea, but in order to keep part of his business, he decides that he will sell only a share of his company - 25%. He did the math and realized that this money is enough for the rest of his life (and even to live another life). What next? How does he sell something that no one will buy in pieces? Let's continue next time.
NSE:HDFCBANKEducation
by Be_Capy
The lifestyle of your savings, and why Big Mac?I've mentioned the word "risk" many times before, and it really is a very important word in the investment process. Today I would like to focus on a risk that you should pay much attention to as a future investor: market risk, or in other words, the risk that you will have to sell the shares you bought cheaper than the price at which you bought them, and suffer a loss in doing so. You will face this risk all the time, which is absolutely normal, because at any time events can happen which will cause the value of the stock to fall. It can be said that investing in stocks is a series of profitable and unprofitable operations. So don't get discouraged and pour ashes on your head if your first trades are unsuccessful. That's part of the process. Investing is not a one-time transaction to make a quick profit, it's a way of life for your savings. Remember the fundamental and simple rule of investing - the expected return is roughly equal to the risk you take. So, when you place money in a bank deposit, the only risk you take is that your money will depreciate by the difference between the rise in prices and the deposit rate. The easiest way to explain this is with Big Macs. Let's say you have the money to buy 100 Big Macs. But you don't spend it, you put it under your mattress. A year later, because of a price increase of, say, 7%, you can buy not 100, but 93 Big Macs with the money from under the mattress. Every time you put money "under the mattress," you reduce the purchasing power of your savings. To preserve it, you can put your money in a year's deposit at the bank. That way, in a year, you'll withdraw the original amount from the deposit, plus a profit in the form of interest. Even if prices go up, as in the last example, you can buy 99 Big Macs, not 93. Why not 100? Because the interest rate on a deposit is usually less than the percentage increase in prices (that is, inflation). In our example, it was 6% versus inflation of 7%. If you choose not to keep money "under the mattress" and not to open a deposit, but to invest in stocks, then at the end of the year you can buy, for example, 150 or only 50 Big Macs, because you are dealing with a potentially more profitable and therefore more risky instrument. This is how the fundamental law of investing works, let me remind you again: as much risk as possible profit. Thanks to this law we can refine our formula: investing in stocks is buying a share of a company with the goal of getting a future profit from its sale and being aware of the risk of a possible loss. Awareness of the risk of possible loss is an obligatory variable of our formula, an obligatory ingredient of our investment recipe. Awareness of the problem is already a big step towards its solution. It's impossible to completely eliminate risks, but with proper management their impact can be minimized. So, after studying the entire series of posts, you will get the necessary knowledge and practical skills to: - find shares of companies interesting for investment; - evaluate the financial condition of companies; - determine the conditions for buying stocks; - determine the conditions for selling stocks; - manage risks; - take into account the results of your operations. You will have a ready-to-use strategy that will always help you find the answer to what to do or not to do with the stock at the current moment in time. You will not have to chain yourself to the monitor and do it all your time. You won't spend any more time doing it than you do watching the news or social media. You will learn to think like a intelligent investor, and you certainly will become one, if you are prepared to open yourself up to a very interesting and fascinating field of knowledge - stock investing. I sincerely wish you success on this path!
NSE:NIFTYEducation
by Be_Capy
Raising initial capital: 4 approaches, of which one is not goodLet's break down the thought from the previous post in more detail. Obviously, to buy stocks, you have to have money, and if you are determined to become an investor, get ready to open your piggy bank. If you don't have savings, however, don't despair, there are other options. I suggest you look at the following 4 options for acquiring the finances to buy stocks: - Reduce your current expenses - Sell unnecessary assets - Increase your regular income - And the option I don't recommend using at the start is to borrow. I immediately stipulate that it is your, and only your responsibility how to apply the knowledge gained - to use something of the proposed or to go another way. I do not insist on anything. Rather, I am sharing information, but the decision is up to you in any case. My opinion - always start with reducing your current costs, because the funds you save now give you a chance to increase your wealth in the future through investing. Make it a rule to plan your purchases in advance and buy only what is on your list. Don't go to the store without a list, otherwise you will buy more than you really need. Next. Look at your possessions. Make a list of what you can sell without compromising your financial and mental well-being. Let what you don't need now serve to increase your wealth in the future. Increasing your regular income is probably the most time-consuming but feasible way to accumulate funds for investment. Many people are often faced with the problem of choosing between a job they love where they don't earn enough and a job they hate with a higher income or, even worse, a job they hate with a paltry income. In the latter two cases, I recommend becoming an active user of services that will help you find the job you want (but don't act in haste, don't quit a job you don't like right away). Remember our goal is to keep and increase our income, not lose it altogether. In the case of a job you love and don't make much money, think about how you can increase your income in your current job. Sometimes all you have to do is make up your mind and ask your employer for it. Even a small increase will help you start saving. And if you have both a job you love and a desired level of income, I congratulate you, you are truly lucky. Moving on. Borrowing for investments is the riskiest option. I highly do not recommend it, especially at the beginning of your investing journey. You definitely should not take a loan from a bank or other financial institutions. The credit rate will only increase your costs, and the need to repay the loan every month will break your entire investment strategy. If family, friends or acquaintances are willing to lend you money long-term and without interest, think about whether your lender is aware of the risks and whether you are aware of the risks associated with investing in stocks, and whether this person will demand the money back before the agreed upon deadline. Even if you have agreed on everything, write down all of the terms of such a private loan on paper, so it is easier to resolve any disputes. I always insist that the investment is conscious, that you understand and are ready to bear the responsibility and risks. So if you have even the slightest doubt about the borrowing option - don't take it! Consider another option. Ideally - work out a step-by-step plan and accumulate the necessary amount of money gradually.
Editors' picks
NSE:BANKNIFTYEducation
by Be_Capy
2
Investing is the ability to say "no" so that you can say "yes"Have a wonderful day, my dear friends! Let's get acquainted. My name is Capy. Someday I will tell you my stunning life story, and how fate has tied me to investing. I can't quite believe it myself sometimes... But that's not what today is about. Today I'm starting a series of posts to introduce you to my vision and strategy in the very multifaceted and insanely interesting topic of stock investing. Let's start by figuring out why you should be an investor? Many people think that investors are some kind of Wall Street wolves who trade stocks of companies and make unimaginable amounts of money on it. I'm sure there are those too. But, in fact, investing has long ceased to be the monopoly of the employees of banks, brokerage companies or big businessmen. Investing is available to absolutely everyone who plans their wealth and has the basic knowledge obtained at university. Or aspires to learn this indomitable beast. This is the reason I started this blog: to help everyone who wants to understand and share my ready-made strategy that you can apply in the process of investing. It's worth saying that every one of us has done the act of investing at least once in our lives, perhaps without even realizing it. For example, when placing money on a bank deposit (the well-known bank deposit), renting out real estate, opening a business or just learning. All these actions have one common formula: you give something away now in order to get it back in the future and, in addition, to make a profit. When you rent out an apartment, you cannot live in it because you have given it to other people to use. But when the lease expires, you'll get your apartment back, plus a profit in the form of the rent you've been receiving all that time. When you start a business, you put money into it so you can pay it back later through the proceeds. And, of course, you expect the returns to exceed the costs invested. When you invest in education, you plan to use what you have learned to achieve something, whether it's getting a job or enriching your inner world. It is the expectation of profit that is the main motivating factor for the investor and the main purpose of the investment. If you give someone an apple and they give it back to you after a while, that's not an investment. And if you give someone an apple, and after some time you get two apples back - you are already an investor, because you made a profit in the form of an additional apple. The upcoming series of posts will focus on one of the investment options - namely, investing in stocks of companies. I plan to teach you how to approach each trade wisely and in a measured way to keep you from engaging in short-term speculation that looks like a casino game. Going back to our formula, a stock investment is a transfer of your money to a particular company in exchange for a stake in its business. The purpose of these actions is to make a profit in the future from the sale of the shares (in the case of buying cheaper and selling higher), or the second option - to receive dividends. Dividends are when the company shares with you a portion of the profits in proportion to your share in the business. But we will focus on the first option to make a profit, that is "buy cheaper - sell more expensive". And the dividends to consider as a nice bonus to this strategy. I will publish a new post soon. Let's talk about approaches that will allow you to find funds for investment.
NSE:RELIANCEEducation
by Be_Capy
1
My crazy partner is Mr. Market!We are used to the fact that the world's most prominent investors are known for their outstanding deals, returns and stability of results over a long time horizon. Yes, all this is certainly a sign of excellence, but no investor has gained his popularity through books. The books he wrote. This man created his writings back in the 1930s and 1940s, but they still inspire anyone who has taken the path of smart stock investing. You've probably guessed by now who we're talking about. It's the humble author of The Intelligent Investor and Warren Buffett's teacher, Benjamin Graham. It's amazing that after many years, this book is still considered the bible of investing on the basis of fundamental analysis - Graham wrote such a thorough description of how a person investing in stocks should think. His insight into the market can be useful to anyone who is exposed to this chaotic environment. To understand Graham's philosophy, imagine that the market is your business partner "Mr. Market." Every day he stops by your office to visit and offer you a deal on your mutual company stock. Sometimes he wants to buy your stock, sometimes he wants to sell his own. And each time he offers a price at random, relying only on his gut. When he panics and is afraid of everything, he wants to get rid of his shares. When he feels euphoric and blind faith in the future, he wants to buy your share. That's the kind of crazy partner you have. Why is he acting this way? According to Graham, this is the behavior of all investors who don't understand the real value of what they own. They jump from side to side and do it with the regularity of a "maniac" every day. The task of the prudent investor is to understand the fundamental value of your business and just wait for another visit from the crazy Mr. Market. If he panics and offers to buy his stock at an extremely low price - take it and wish him luck. If he begs to sell him the stock and calls an unusually generous price - sell it and wish him luck. Of course, after a while, it may turn out that Mr. Market was not bad at all and made a very profitable deal with you. But the fact is that on the long horizon of time his luck will be washed away by a series of stupid things he will inevitably do. As for you, rest assured that tomorrow you will meet another Mister. So, as Graham has taught us, is teaching us, and will continue to teach us - you just have to be ready for it. Understanding the fundamental value of the company, this meeting will bring you nothing but pleasure!
TVC:DJIEducation
by Be_Capy
1
Price is what you pay, but value is what you getWarren Buffett is the most successful stock investor in the history of the world. Of course, which we know now. "The Oracle of Omaha" - that's what fans of his "magical instinct" call Buffett. But is that the point? As an 11-year-old child, little Warren was inspired by the possibilities of the stock market and invited his sister to participate in his first investment. These were preferred shares of Cities Service. The sister agreed to take the risk and Warren bought 3 shares at $38.25. But then, the wave of enthusiasm turned to disappointment and guilt - the shares fell to $27. Buffett's first investment "enterprise" lost 29% of the amount of investments that were borrowed. We can only imagine how the young investor felt at that moment, but I think this feeling is familiar to many: positive expectations clashed with the harsh reality of the stock market. Warren didn't sell shares. But when the price for them reached $40, he did it instantly. Apparently, considering this whole undertaking a mistake. The income was 4.6%, the sister received her money back. Everything worked out. Surprisingly, Cities Service's share price rose to $202 a few days later. Or +428%, Warren! The entire subsequent history of Warren Buffett confirms that he drew the right conclusions from the experience of his childhood. He realized that the price on the stock exchange may not reflect the value of the company itself. Buffett began to study accounting, the principles of fundamental analysis of enterprises, the ideas of Benjamin Graham. This allowed him to develop an approach that consisted in determining the real value of the company, different from the one that we see on the stock exchange. "Price is what you pay, but value is what you get". From myself I will add: and if the value is higher than the price - such an investment is considered reasonable. In the chart above, the price history of Buffett's main holding company, Berkshire Hathaway. As well as the S&P500 index. As you can see, his company "overtakes" the index, which means it shows much better performance than the average value of 500 US companies. Perhaps, in addition to deep analysis of the companies' business, Buffett's unique investor instinct helps, I don't know. But the fact that he is a real Wizard of our time is an indisputable fact for me.
NYSE:BRK.AEducation
by Be_Capy
Not every swing high is a Fake Breakout !Good morning traders. If you have entered long at the high of the green candle as shown in the chart you would have thrown out of the market by taking your SL and kept you thinking Oh! It must be a Fake Breakout. -->We all know that market structure is combination of waves. -->These waves will follow Primary trend, Secondary trend and all the minor trends on the way. -->In the Bullish momentum - Price will form Higher highs and higher lows. -->In the Bearish momentum price will form Lower highs and lower lows. -->If we observe the recent path the market is following, it has formed higher highs and higher lows.(Bullish If i have to say) -->Before Friday the recent swing low the market has formed at 17637 level. About the fake breakout - The price level it broke has hardly respected once. If the price has respected that level 2-3 times and then if it breaks it and comes back into range then we may call it a fake breakout or if it has broken the previous swing low then we can consider it as a fake breakout. Since none of the above mentioned has happened its just be a another swing high and market is still in up move. Above concept is done. Now on Friday market has formed a new swing high 17830 level and major swing low is 17637 levels. If price can go past 17835 on Monday then swing low will be shifted to 17723 levels. Then why I post shorting trades in the Ideas? I try to plan my trades at the extremes (at swing lows and swing highs). There is no point in going long at a swing high unless our stop loss is huge. That is why in a bull structure I plan to buy at swing lows or I plan to short at swing highs both of them will have small SL and High rewards. Do you agree with me in this aspect? If we observe our recent market openings, it has opened with gap ups. So I don't want to risk huge SL for limited intraday up move that's why I plan contra trades. On Monday I will be cautions because SGX Nifty is showing 18000 + and it will make it as a good supply zone. I will observe the price action in smaller time frames and plan my trade. The future market direction will be decided at these levels. --> What we need to observe? --> Whether the market is accumulating at this level or Distributing at this level. I have written so much in this ,I will write more based on the response I get from this. I know few of these will be confusing, do let me know If you want to know about particular concepts then I will have Idea about what I should be writing for. *SECURING THE TRADE AND PROTECTING THE CAPITAL SHOULD BE YOUR FIRST PRIORITY. *NOT A SUGGESTION VIEWS ARE FOR EDUCATIONAL PURPOSES. If you think video analysis will be good for better understanding & If you want me to do video analysis pls give a boost. Your boost and follow is my MOTIVATION.
NSE:NIFTYEducation
by Mo-Kri
Control emotions during tradeIt is very important to control your emotions during trading, human emotions are a big hurdle in trading, you can not maintain discipline if you can not having control on your emotions. Without discipline you can make money in market but you can't retain it. Here is 5 things you can adopt to improve your trading skill and control emotions. SET ALERTS : we use to watch market continuously and during watch we see so many trades which we should not take, it disturb our trade filtration and also affect out trading phycology, we should wait for our levels and what our set strategy giving trade not to enter early or fake trades, you should set alert according to your levels,chart pattern,breakout or breakdown, any of your trading strategy you are using, there is no need to watch screen constantly in this free time you can also paly any indoor game to keep you mind refreshing and active, once your price alert hit come up on screen then you can go with your trade. VOLATILE HOUR : some time we find trades in sideways or less movementing market and it face us stop loss, no movement or very small target, it's better to took any trade in volatile hours so that trade can exactly work according to your strategy try to avoid trades which are generating in less market movement. Generally Indian market movement is 9:15 to 9:30 very volatile 9:30 to 10:00 volatile market 10:00 to 11:30 stable market 12:00 to 2:00 correction/stable/new/global market 2:30 to 3:00 volatile 3:00 to 3:30 last volatility NEVER WATCH YOUR PROFIT & LOSS DURING TRADE : when we see running profit loss in dmat it automatically affect psychology of trade and we start convening our self for exit, same side in profit and and loss also some time we more think to hold that trade either to exit. we should took trade and either to see p&L we should watch only price and exactly exit according to our strategy do not exit too early do not exit too late if you took that trade according to your pattern, technical any strategy then you should also exit according to that strategy. watching price in compare of P&L helps a lot for long run. STOP AFTER THREE CONSECUTIVE WINS OR LOSSES : it is very important to stop at a point every day in trading, if you did 3 trades either continuously wining trade or loosing trade, at this point you should stop your trading for the day. market is not for one day it will open again next day with same things. do not excited in profit and also in loss, if it was bad day not a problem close your terminal come again next day with fresh mind do not influence your fresh trade with old one . TAKE BREAKS : taking break in trading is very important to keep your mind happy active and fresh every time, as just we do keep our personal and professional life separate, do not mass up one with other. take your self out on weekend do not think about your regular profit and loss take proper break that you need.
NSE:NIFTYEducation
by ProfitPicks
3
How To Use Financial Ratios To Make Better DecisionsFinancial Ratios help you evaluate a company. Most financial ratios will show you how much money you're paying for a specific piece of the business. Let us give a few examples: Price-to-Sales Ratio = Market Cap / Sales The Price-To-Sales ratio or PS ratio tells you how expensive a company is relative to its total sales. The formula is calculated in two different ways: divide the company's market capitalization by its revenue or divide the current stock price by revenue-per-share. Because this ratio is being calculated with live price information, you can also watch it in real-time on the chart as we've shown in this example above. If a company has a market cap of $10 billion and revenue of $1 billion, well that, that implies a PS ratio of 10. You're paying $10 for every $1 in sales. You can do ratios like this for all aspects of the company. For example, PE ratio or Price-To-Earnings ratio measures the Market Cap / Earnings . This tells you how much you're paying for every dollar of earnings . Keep in mind that Financial Ratios are not perfect. They are also not a buy or sell recommendation. Instead they are shortcuts, ways to quickly evaluate a company, compare its underlying fundamentals, and study that company relative to other companies. You also must remember that financial metrics can change quickly with a single earnings report. A company's future expectations are also just as important. A company like Apple might have a high PE ratio, but if they're building and growing revenue into the future, their PR ratio could come down over time. Remember, Financial Ratios and Financial metrics in general paint a picture of the underlying business and its earnings potential. Here are some other resources to get you started: 1. Read more about Financials on TradingView in our Help Center. 2. You can also code your own strategy or indicator using this financial information . 3. We've also created a library in our Help Center so you can learn more about every Financial metric . Here are some other financial ratios that you may find interesting and how they're calculated: PE Ratio = Market Cap / Earnings PB Ratio = Market Cap / Book PEG Ratio = PE / Earnings Growth Quick Ratio = (Cash + Cash Equivalents + Current Receivables + Short Term Investments) / Current Liabilities Dividend Yield = Dividends Per Share / Price EV Multiple = Enterprise Value / EBITDA To access all of the Financial Ratios available to you, click the Financials button at the top of your chart. From here, you can select many different Financial metrics and study markets at a deeper level. More importantly, you can combine the study of Technical and Fundamental analysis at the same time. Meaning you can evaluate the fundamental side of the business including its earnings and valuation while ALSO studying price action and planning a trade. Please feel free to share your feedback and comments below! Thank you for reading.
Editors' picks
NASDAQ:AAPLEducation
by TradingView
8
POSITIONAL STOCKS FOR 2-3 MONTHWe have shortlisted some stocks as per the fundamental analysis for the positional trading but we do not enter into any trade with only fundamental. We use our trading strategy to enter into the trade and the strategy based on price action technical analysis. We always wait for our setup to enter into the trade. We take the trade only if the particular stock meets all our entry criteria, Most of the time we take entries in a lower timeframe like 15 minute or 1-hour timeframe. There are lots of research behind the stock selection and the trading strategy, So please do not invest without proper knowledge, Do your own research before investing or trading. And this list will be updated according to the market movement. These are the stock list for the month 1  - SPENCERS RETAILS 2 - CESC 3 - GRUH FINANCE 4 - CHALET HOTELS 5 - PAGE INDUSTRIES 6 - BERGER PAINTS
NSE:CESCEducation
by MarketNeeti
Google Bear Phase AnalysisGoogle had a good bull run last year, making all-time high each & every day, but due to global cues in Jan end, it crashed 16% from the recent high in just 10 sessions, which lead to creating a supply zone at the top. It tried 4 times in the past 5 months to clear the supply zones but due to high supply presence, it failed 3 times, recently due to earnings euphoria it cleared the supply zone indicating to fresh the bull run. Thanks to its great results which made it break the ascending channel. It may consolidate till the demand zone (as per Fibonacci Retracement) & resume its bull run.
NASDAQ:GOOGEducation
by maheshetty