Term 3 finals

• Fundamental analysis


  The examination of the underlying forces that affect the well-being of the economy, industry groups, and companies
• How Warren Buffett chooses a great stock

  1. Stock must be stable and understandable

  2. Stock must have long term prospects

  3. Stock must be managed by vigilant leaders

  4. Stock must be undervalued
• Factors Affecting Stock Price Movement

  • Hype
  • Politics
  • Supply & Demand
  • Company News
  • Natural Disasters
  • World Events
  • Economic Growth
• GDP (Gross Domestic Product)


  The most important economic indicator published, the nation's report card, four major components are consumption, investment, government purchases and net exports, it lets us know if the economy is growing or shrinking
• Consumer Price Index (CPI)

  Tracks retail-level price changes by comparing prices for a specific basket of goods and services to base-period-price, covers both domestically produced and imported goods
• Consumer Confidence


  Monitors consumer sentiment based on monthly interviews with thousands of households, reflects the nation's financial health, important to financial markets during times of national crisis or panic
• Unemployment Index


  A subset of the government's employment report, less significant to investors who are looking toward economic future, but several months of low unemployment rates can signal higher inflation
• Housing Starts


  Measure the new construction of single-family homes or building each month
• Business Inventories


  Collected from three sources: Manufacturing, Merchant wholesalers, and Retail Reports
• Producer Price Index (PPI)

  Includes breakdowns on raw materials (commodities), intermediate goods (items that are in production) and finished goods (ready to hit the shelves)
• Stocks In Your Everyday Life

  • PNX, PCOR, SMC, MPI, GTCAP
  • AC, MER, EDC, MPI, GTCAP, SMC, DMC, URC, AGI, DMPL, PF, CNPF, AP, MWC
  • SM, ALI, AGI, MEG, SSI, JGS, PGOLD, DD, RLC, SMPH, RRHI
  • AC, ALI, CPG, FLI, FDC, SMPH, RLC, JGS, MEG, AGI, CEB, PAL, RWM, BLOOM, MCP, PLC, BEL, LR
  • ABS/P, GMA7, AC, TEL, GLO, GTCAP, BPI, BDO, SM, MBT
  • HOUSE, HLCM, LRI, DMC, CROWN
• When is The Best Time To...

  • BUY?
  • SELL?
• Technical Analysis


  The study of price movements primarily through the use of charts for the purpose of forecasting future movements
• Fundamental Analysis


  The study of the shifts between the forces of demand and supply in relation to price movements, uses charts to determine the psychology and behavior of the market towards price
• Benefits of Technical Analysis

  • Able to identify the right entry (buy) point
  • Able to identify the right exit (sell) point
  • Become a better trader/investor with better trading strategy
  • Able to minimize losses and maximize profits
  • It can help manage your emotion in your trading
• There is no such thing as a risk-free investment – all investments, including those that are guaranteed to return principal, carry some sort of risk. However, the greater the amount of risk that an investor is willing to take on, the greater the potential return.
• How To Minimize Risks In Equities

  • Research your investments
  • Diversify
  • Invest over a long time
  • Invest on knowledge
  • Create & Maintain a Trading Diary
• Dollar Cost Averaging


  An investment technique of buying a fixed peso amount of a particular stock on a regular schedule, regardless of the share price
• Technical analysis


  A trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume
• Broad types of indicators used in technical analysis

  • Price trends
  • Chart patterns
  • Volume and momentum indicators
  • Oscillators
  • Moving averages
  • Support and resistance levels
• Price trends


  The overall direction in which the price of a market, asset, or metric is moving
• Identifying price trends in technical analysis

  Trend lines or price action that highlight when the price is making higher swing highs and higher swing lows for an uptrend, or lower swing lows and lower swing highs for a downtrend
• Momentum indicators


  Technical analysis tools used to determine the strength or weakness of a stock's price trend
• Momentum


  The rate of the rise or fall of stock prices
• Oscillators


  Technical analysis tools that construct high and low bands between two extreme values and then build a trend indicator that fluctuates within these bounds
• Moving averages (MA)


  Used to pinpoint trade areas, identify trends, and analyze markets. They help traders isolate the trend in a security or market, or the lack of one, and can also signal when a trend may be reversing
• Support


  A price level (or zone) on a chart where demand outweighs supply. It can act as a floor, preventing further decline, and shows buyers' willingness to buy
• Resistance


  The opposite of support. Prices move up because demand exceeds supply, but as prices rise, selling pressure eventually overwhelms buying interest. Resistance can act as a ceiling, preventing further upward movement
• Traders often use trendlines and moving averages


  To identify support areas
• Fundamental analysis is a method of evaluating securities by attempting to measure the intrinsic value of a stock
• Technical analysis uses stock charts to identify patterns and trends that suggest what a stock will do in the future
• Fundamental analysts study everything from the overall economy and industry conditions to the financial condition and management of companies
• Earnings, expenses, assets, and liabilities are all important characteristics to fundamental analysts