Presentation on theme: "BUY ONE, GET ONE FREE! BUY THREE PRODUCTS, GET THE THIRD FREE!! TRIPLE POINTS THIS WEEK-END ONLY!!! Whats our favourite???"— Presentation transcript:
BUY ONE, GET ONE FREE! BUY THREE PRODUCTS, GET THE THIRD FREE!! TRIPLE POINTS THIS WEEK-END ONLY!!! Whats our favourite???
You would have paid $1,000,000 last month This month, you would pay $900,000 … FOR THE SAME CAR!
You would have paid 100 last month You would pay 80 this month … FOR THE SAME DRESS!
You would have paid 40 last month You would pay 20 now … FOR THE SAME STEAK!
A new model coming out Last seasons fashion Coming up to sell-by date Too little demand Too much supply Use of a loss leader to bring in customers
Would you prefer to buy at £1.95? Would you prefer to buy at £1.04? When the stock was on sale of course!
Would you prefer to buy at 17.26? Would you prefer to buy at 2.03? When the stock was on sale of course!
Would you prefer to buy at $27.73? Would you prefer to buy at $12.08? When the stock was on sale of course!
Answer: You are buying the same product for a lower price
No – a company is dynamic, its always changing. The engine of a car wont change over a year The engine of a company certainly can… lower price It is IMPERATIVE not just to buy a stock because its at a lower price, but because better value it is at better value.
Race ahead of them…
How can you tell if a stock is at good value when the price falls? Dividend Yield Price/Earnings Ratio Price/Cash Ratio
During the last class, you bought and sold within minutes. An investor buys and holds for the medium to long tem (i.e. months or years rather than minutes or days)
A. To avoid HUGE transaction costs! VALUE PRICE B. To let the stock (i.e. the company) develop ad increase in VALUE and hence increase in PRICE!
Lack of awareness – they dont know what they are doing They have unrealistic expectations They neglect to take transaction costs into account They want faster money
Yes… for about 5% of traders As happened in the last class, successful traders simply take the money off unsuccessful traders. Ordinarily, the successful trader is the professional institution since they get the information first
For somebody with less time and knowledge, you have a much better chance of doing well as an investor, because new money IS being created as the companies develop. If you do choose the trader route, remember the odds are stacked against you.
Speculating Short Term Bets Active Buying & Selling Uncertain basis for buying and selling Investing Medium to Long Term Investing on the Basis of Company Fundamentals – Dividend Yield, Price/Earnings Ratio etc