Class Notes (837,548)
Canada (510,312)
York University (35,409)
ADMS 3531 (30)
seldrim (1)


5 Pages
Unlock Document

Administrative Studies
ADMS 3531

LESSON 1. What is stock investing? What are stocks? A stock or share represents ownership in a piece of a company. The stock price of a company is the current market price of a single stock in that company. Stocks are traded on a stock exchange, such as the NYSE or NASDAQ Buyers put in a Bid price, sellers put in an ask price which they are willing to buy or sell for. What are some of the key terms? The number of stocks of a single company being traded over any period of time is known as its market volume. Market capitalization = current stock price x No. of outstanding shares The market capitalization of a company is the total value, as determined by the stock market Day range: lowest and highest price traded in a day 52wk range: the lowest and highest price traded in a year Why do people invest in stocks? Capital gain, earnings via dividend and interest. Shareholders are compensated for their risk through a risk premium. LESSON 2. STRATEGIES FOR STOCK INVESTING What is an investing style? Over 2000 companies on NYSE and over 3000 in Nasdaq. - Your timeline - Your personal risk tolerance - Time that you want to spend managing the stock portfolio a. How much should I invest? - Never invest what you truly can’t afford to lose ( 1 or 2 months worth of living expenses in a nest egg) - Find risk-reward balance : Under 40 years – 60-80% stocks, Close to 80years : consistent returns should outpace inflation : 20-40% stock - Do what feels right b. What are large, medium and small caps? - Under $1 billion: small caps : core products, specific markets, high growth potential , more risk for bankruptcy, innovative products. - $1 billion - $10 billion : mid caps - More than $10 billion: large caps / blue caps Young investors, longer investment timelines: more small and mid caps and less large caps Older investors, shorter investment timelines: more large caps c. What are value, growth and income stocks? Value investing: look for stocks which are undervalued: company assets, current earnings, products and competitive advantage. Low P/E Growth investing: look for earnings momentum or future growth in profits and the products of a company. Higher P/E. mostly small or mid caps Income investing: companies with consistently high dividends distributed to shareholders. Large caps Dividend payment = dividend declared x no. of shares you own. LESSON 3. What makes a company valuable and what makes a stock a “buy”? What makes a company valuable? The product - Who buys the product? What could affect the purchase of that product? - What makes the product profitable for the company - Scalability is important Competitive advantage - Economies of scale : intel - Branding: Nike Company assets - Tangible assets - Intangible assets : value investors look into assets - Company assets: (company assets – company liabilities) / no. of shares outstanding KEY INDICATORS Investors look at EPS : company earnings/ no. of outstanding shares Issue of more stocks would lead to stock dilution and steadily rising EPS is the factor to be looked at. PE ratio: current stock price/ EPS The price paid for a company is just as important as the quality of the company Rule of thumb: - PE above 11 : expect positive growth - PE at 11 : zero growth - PE below 11: negative growth Company debt or liabilities: Debt accrues interest and increases chance of bankruptcy Equity: compan
More Less

Related notes for ADMS 3531

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.