fin555 (brief)

• Technical analysis


  A method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and trading volume, to identify trends and predict future price movements
• Technical analysis


  • Does not measure the intrinsic value of a security
  • Focuses on charts and tools to identify trends and patterns to predict future price movements
• Dow Theory


  The basis of technical analysis, which assumes that the market discounts everything, prices move in trends, and history tends to repeat itself
• Assumptions/philosophy of technical analysis

  • Market discounts everything
  • Prices move in trends
  • History tends to repeat itself
• Fundamental analysis


  Focuses on studying the economy, industry, company, and financial condition to decide what securities to buy or sell
• Technical analysis


  Focuses on studying historical price and volume trends to decide when to buy or sell
• Technical analysis is not a crystal ball and cannot definitively predict future price movements
• Technical analysis is applicable to a wide range of financial instruments, but is most useful in liquid markets
• Technical analyst/chartist


  A researcher who analyzes investments based on past market prices and technical indicators
• Technical chart


  A graphical representation of a security's price and volume history over a time interval, used to make informed investment decisions
• Types of technical charts

  • Line chart
  • Bar chart
  • Candlestick chart
• In Fin 348, students need to familiarize themselves with line, bar, and Japanese candlestick charts
• An initial public offering (IPO) is the first time that stock from a company has been sold to the general public.
• A secondary offering occurs when an existing shareholder decides to sell some or all of their shares on the open market, which increases supply and lowers price
• The primary market is where the issuer sells securities to investors.