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Jason Matteo Technical Director. Goals… Understand the basics of investing and of investment methods and strategies Learn from each other building your.

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Presentation on theme: "Jason Matteo Technical Director. Goals… Understand the basics of investing and of investment methods and strategies Learn from each other building your."— Presentation transcript:

1 Jason Matteo Technical Director

2 Goals… Understand the basics of investing and of investment methods and strategies Learn from each other building your knowledge and your network Get Bloomberg certified Have fun

3 Weekly Lessons  Each week will have a brief topic related to investing 9/5- Basic Overview 9/12- Bloomberg Professional Certification 9/19- Example Online Broker Overview 9/26- Technical vs. Fundamental Analysis 10/3- The Power of Compounding, Dividends, DRIPs 10/10- Mutual Funds & ETFs 10/17- Bonds 10/24- Options 11/7- Futures 11/14 -Forex

4 Disclaimer  All information is intended for educational/informational purposes only and is not a recommendation or endorsement of any particular investment or investment strategy  I am not an expert and I will not pretend to be. My goal is for everyone to benefit from each other by shared knowledge

5 9/5 Investment Basics Questions to be answered: How should one invest? And why? Invest in what? How does one invest? What are the mechanics?

6 Basics  Saving provides funds for emergencies and for making specific purchases in the near future  Investing Focuses on increasing net worth and achieving long- term financial goals

7 Investing  Buying an investment Putting money into an asset that generates a return  Speculation Not the same as an investment Purchasing assets, equity or debt because of an assumed value Ex: Gold coins, baseball cards, gems

8 What to Invest In – The Basics Asset Classes  Stocks  Bonds  Cash There are others but these are the fundamental asset classes. Start with these before getting fancy.

9 Asset Classes Stocks – Ownership in a corporation Bonds – Corporate and government debt – Must be repaid Cash – Checking, savings accounts – Money market accounts – CDs – US Treasury Bills

10 Types of Stock  Common stock  Preferred stock Convertible

11 Investing in Stocks  Common Stock Purchasing a part of the company Possible dividends and capital appreciation Many are limited liability Companies may repurchase their own stock  Types of Common Stock Blue-Chip Stocks Growth Stocks Income Stocks Speculative Stocks Cyclical Stocks Defensive Stocks


13 Basic Terms  Earnings per Share: The amount of profit to which each share is entitled  Going Public: Slang for when a company is planning an IPO.  IPO: Short for Initial Public Offering. An IPO is when a company sells stock in itself for the first time.

14 Basic Terms  Market Cap: The amount of money you would have to pay if you bought every share of stock in a company. Multiply outstanding shares by stock price  Share: A share represents an investor's ownership in a "share" of the profits, losses, and assets of a company.

15 Basic Terms  Ticker Symbol: A short group of letters that represents a particular stock (e.g., ”Google" is referred to as ”GOOG".)  Underwriter: The financial institution or investment bank that is doing all of the paperwork and orchestrating a company's IPO.

16 Basic Terms  Bull Market A market in which prices are rising  Bear Market A market in which prices are falling  Recession A period of temporary economic decline AKA the past 5 years…

17 Mutual Funds vs. Individual Stock and Bond Trading  Mutual Funds Professional management of investing Minimal transaction costs May offer higher returns Many to choose from  Individual Stock and Bond Trading Requires time and expertise Higher transaction costs Less likely to have proper diversification

18 Types of Bonds  Corporate Debenture  Federal Government Treasury Bonds (T-Bonds, Treasuries)  Municipal bonds General obligation Revenue

19 Bonds  Investing Produce steady income If held until maturity, bonds are a safe investment with low risk  Par Value Face value or return at maturity  Coupon interest rate Percentage of par value paid out annually

20 Types of Bonds  Corporate Bonds Allow firms to borrow money  Treasury and Agency Bonds Agency bonds are virtually risk-free with higher interest rates than Treasuries  Municipal Bonds Tax-exempt Serial maturities Not entirely risk free  Junk Bonds Low-rated or high- yield Greater risk of default Callable (issuer can call them back and reissue at an altered interest rate)

21 Risk  In finance, typically defined as standard deviation of returns.  What are the risks for: Stocks Bonds Cash

22 Asset Allocation  What percent of your money should be in each asset class? For example: ○ 70% stock, 25% bonds, 5% cash, or ○ 30% stock, 65% bonds, 5% cash  The answer depends upon: Your investment objective Your tolerance for risk Common rule-of-thumb % stock = 100 - your age

23 Risk – By Asset Class Worst Annual Return Since 1925 Average Annual Return Since 1925 Stocks -43.4% (-67.6% worst 12 mo.) 9.6% (162.9% best 12 mo.) Bonds-7.8%5.5% Cash.1%3.7% Sources:, Morgan Stanley,, Federal Reserve – St. Louis

24 “Typical” Portfolio Allocations StocksBondsCash Conservative20%55%25% Moderately Conservative 40%50%10% Moderate60%35%5% Moderately Aggressive 70%25%5% Aggressive80%15%5%

25 Summary  Asset allocation is the single biggest determinate of portfolio results  Major asset classes Stocks Bonds Cash  How you allocate your investments depends upon the returns you need and risk you can take  Rule-of-thumb: %stock = 100 - age

26 Where and how do I start? (Starting an account, resources for learning)

27 Keep learning!  Make sure you understand the basics Investopedia ( Motley Fool ( Investor Guide ( These sites also have introductions to certain investing strategies  Books (learn from the greatest investors) How to Make Money in Stocks (William O’Neil) Beating the Street (Peter Lynch) Lessons from the Great Stock Traders of All Time (John Boik) The Warren Buffet Way (Robert Hagstrom) The Intelligent Investor (Benjamin Graham)

28 Brokerages  Need a medium to trade through (brokerages)  Choosing a broker full service vs. discount ○ Fees (Commission) ○ Services ○ Minimum balance

29 Brokerages

30 Videos at-are-stocks/ at-moves-stock-prices/ at-is-the-dow-jones-industrial-average/

31 Next Meeting 9/12  Bloomberg Professional Certification

32 Bloomberg Professional Service and the Bloomberg Terminal

33 Bloomberg  Named for Bloomberg L.P. founder Michael Bloomberg.  Current mayor of NYC for a little while longer…until Anthony Weiner aka Carlos Danger “the peter tweeter” wins the upcoming election.


35 Bloomberg Terminal Computer system that allows users to monitor and analyze real-time financial market data movements The system also provides news, price quotes and an immense database Most financial firms use it N-taog N-taog

36 Bloomberg Terminal (cont.)

37 Bloomberg (cont.) It costs $1500 a month We have two here at UF, one in Hough Hall and one on 3 rd floor Library West FREE for students! The certification is free also!

38 Getting Started  berg berg  Go to Club West. The terminal is located on the 3 rd Floor behind the services desk next to the microfilm area  Ask a receptionist about it and they will type in a magic password so you can use it

39 Certification

40  Takes about 8 hours, I was able to knock it out all in one sitting, but you can work on it a little at a time  Bring headphones so you can watch the videos with sound and not piss off everyone in the library  There is a sign in sheet where you can reserve time slots if someone else is currently using the machine

41 Why Get Certified  Its cool and you learn a lot. Using double monitors automatically makes you feel more important  You can put something else on your resume other than your name  Many companies use it so the fact you even know what it is AND have used it before will make recruiters SMILE

42 “Yay he knows how to use Bloomberg!”


44 Next Meeting 9/19  Example online broker overview

45 Random Ass Videos $#!* People Say About Investing Stock Market Rap E-Trade Baby 2 E-Trade Baby

46 Technical vs. Fundamental Analysis

47 Their Main Differences  At the most basic level, a technical analyst approaches a security from the charts, while a fundamental analyst starts with the financial statements. ndamental-versus-technical-analysis/

48 Fundamental Analysis  Looks at financial data: revenues, profits and losses, business trends  Seek growth factors.  Examine macroeconomic factors such as a company's business sector and the overall economy in relation to a company's lines of business

49 Technical Analysis  Looks only at price and volume action  All information about a stock is reflected in the share price  Analyzing the price movements will predict where a stock price will go from here  Indicators: MACD, crossovers, divergence, RSI etc.

50 Pros and Cons  Proponents of fundamental analysis think technical analysis is voodoo mumbo jumbo and doesn’t work.  If fundamental analysis works so well then why isn’t everyone rich?

51 Conclusion  A wise investor will understand and take into consideration both methods of analysis.

52 Next Meeting 10/3  The Power of Compounding, Dividends, DRIPs

53 The Power of Compounding, Dividends, DRIPs  “Compounding interest is the most powerful force in the universe” -Albert Einstein at-is-compound-interest/

54 The Rule of 72  A rule stating that in order to find the number of years required to double your money at a given interest rate, you divide the compound return into 72. The result is the approximate number of years that it will take for your investment to double. e-of-72/

55 Dividend  A cash payment (usually quarterly) to shareholders out of its profits.

56 Comic Relief  If you had bought $1000.00 worth of Nortel stock one year ago, it would now be worth $49.00.

57  With Enron, you would have $16.50 of the original $1,000.00.

58  With WorldCom, you would have less than $5.00 left.

59  If you had bought $1,000.00 worth of Budweiser

60  (the beer, not the stock)

61  one year ago, drank all the beer, then turned in the cans for the 10 cent deposit, you would have $214.00.

62  Based on the above, my current investment advice is to drink heavily and recycle.

63 DRIPs  Dividend Reinvestment Plan  Broker automatically uses dividend to purchase more shares of the company  Most online brokers offer them for free.  Best part is you do not have to pay transaction commission (still have to pay taxes though  )

64 Drawbacks  Frequent purchases of fractional shares becomes somewhat complicated for tax purposes and documentation  However most online brokers do a good job at automatically generating statements and tax forms

65 Next Meeting 10/10  Mutual Funds & ETFs

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