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Valued investors

Valued investors

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Valued investors

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  1. Valued investors W e l c o m e !! @ copy rights: ahsan @

  2. Wealth creation Basics Stocks & Bonds @ copy rights: ahsan @

  3. Wealth creation Basics Stocks & Bonds Fazle Rabbi Mohammed Ahsan Research Officer Dhaka WASA 98, Kazi Nazrul Islam Avenue Dhaka-1215 M a r c h , 2 0 1 1 @ copy rights: ahsan @

  4. What do we mean by STOCK ? • In plain n simple: STOCK is the share in the ownership of a company. • Stock represents a claim on the company's assets and earnings. • Generally: Shares, Equity or Stock means the same thing. @ copy rights: ahsan @

  5. Why does a company issue stock? They issue stocks in order to: • Extend market share ; or • Be market leader ; or • Get bigger asset. @ copy rights: ahsan @

  6. How does a company issue Stock? • A company can either borrow money from banks or from NBFIs; or • Can raise it by selling part of the company; i.e. : Stocks, Equity or by Debt financing (loans/issuing bonds) @ copy rights: ahsan @

  7. What’s the advantage to issue stock? The most common phenomena are: • It does not require paying back the loan or interest payments along the way; • No chances to involve into debt financing; • No chances to creating obstacle in expanding market share. @ copy rights: ahsan @

  8. How do we trade Stocks? • Most stocks are traded in capital market , i.e. in Stock Exchanges. • Exchanges are places where buyers and sellers meet and decide on a price. • Some exchange has physical locations where transactions are carried out on a trading floor. @ copy rights: ahsan @

  9. Types of Market Places • Primary market: The primary market is the first phase of stock trade where investors keep their IPOs before trading at the floor. • Secondary market: The secondary market is what where people trade IPOs and traded securities. People trade it through a network of computers electronically. @ copy rights: ahsan @

  10. The “Home Work” in trading : Risk Measurement • No company or institute can guarantee you when the stock price stops in up-end or low-end; and • How long it takes to get the profits; • No guarantee what percentage of capital gain you can get. @ copy rights: ahsan @

  11. What causes prices to change? • Prices change by market forces; • Prices change because of demand and supply; • Prices change by flow of information, it may be positive or may be negative. @ copy rights: ahsan @

  12. What should we look for:A Value Stock or a Growth Stock ? • Growth Stocksare companies that will have positive earnings and have above –average risk-adjusted rates which are in undervalued. • Value Stocks are those stocks that appear to be undervalued for reasons other than earnings growth. • Earnings are the profit of a company what it makes, and in long run no company can survive without them. If a company never makes money, they aren't going to stay in business. @ copy rights: ahsan @

  13. Types of Stock • Growth Stock:are companies that will have positive earnings and have above –average risk-adjusted rates which are in undervalued; • Defensive Stock:are those stocks whose future earnings are likely to withstand and economic downturn; i.e. public utilities or grocery chain-firms. • Cyclic Stock: are those stocks whose sales and earnings will be influenced by aggregate business; i.e. steel, auto or heavy machinery industries. • Speculative Stock: are those stocks whose assets involve great risk but that also have a possibility to gain. @ copy rights: ahsan @

  14. Know your Market • The Bulls: a bull market is that when economy goes easy- rosy, GDP is growing, people find jobs and stocks are rising. Things are just plain to picking stocks during a bull market is easier because everything is going up. • The Bears: a bear market is opposite of the bull market. Bear occurs when the economy is bad, recession starts or continues, and stock prices are falling. @ copy rights: ahsan @

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  16. The Relative Strength Index-RSI • RSI : The relative strength index (RSI) is an oscillating indicator. It operates within a range-bound area between 0 and 100. As the RSI line moves higher, the price is enjoying increased strength. As it moves lower, the price is suffering from a lack of strength. • Using the RSI, have to watch for those times when the line rises above 70 or below 30. Buying or selling decision will come out of one of those areas. @ copy rights: ahsan @

  17. Simple Moving Average-SMA • Simple Moving Average (SMA) is a trending indicator that shows the volatility of daily price movement; and • It highlights the top of the price movement of a security. • If the SMA is pointing up, the security is trending higher. • If the SMA is pointing down, the security is trending lower. @ copy rights: ahsan @

  18. Money Flow Index-MFI • The Money Flow Index (MFI) is an indicator with a single line that moves back and forth between 0 and 100. • The MFI is a combined indicator. It consider both price action and volume data into its calculation. • The closer to 100 the indicator moves, the stronger it is, while the closer to 0 it moves, the weaker it is. @ copy rights: ahsan @

  19. Bollinger Bands • Bollinger bands are used to judge the magnitude of a stock movement and identify moments when the trend of the simple moving average may be coming to an end. • Bollinger bands show the expansion and contraction around a simple moving average. The expansion of the bands is based on the volatility of the equity. If the equity becomes more volatile, the bands expand. @ copy rights: ahsan @

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  31. Fazle Rabbi Mohammed Ahsan has been born in Dashmina Upazilla under Patuakhali district in 1970. He has passed H.S.C. from B.M. College, Barishal in 1988. Mr. Ahsan has got his MBA from the Business Faculty of Dhaka Varsity in Strategic Int’l Management in 2008. Presently he is serving in Dhaka WASA in the capacity of Research Officer. He can be reached by kashahsan@hotmail.com, or +88 0155 2324656/ 01711703613/ 01670286528 @ copy rights: ahsan @