INVESTING For Beginners: The KEY Principles of INVESTING in the STOCK MARKET When Starting Out | Dylan Reeves-Fellows | Skillshare

INVESTING For Beginners: The KEY Principles of INVESTING in the STOCK MARKET When Starting Out

Dylan Reeves-Fellows, Economist & YouTuber

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11 Lessons (28m)
    • 1. Investing for Beginners - Welcome to The Class

      1:38
    • 2. Understanding the Stock Market

      2:20
    • 3. Why Stock Prices Change

      4:20
    • 4. Case Study: Easy Jet Share Price

      4:14
    • 5. A Lower Risk Investment Strategy

      2:52
    • 6. Do This Before you Invest... (KEY!)

      2:30
    • 7. What are Dividends?

      3:42
    • 8. I wish I Knew this Before I Started Investing (KEY!)

      2:50
    • 9. Mental Health and Investing

      1:11
    • 10. Recap and Conclusion - Thank you!

      1:03
    • 11. (BONUS) My Investment Broker

      1:36

About This Class

Learn about Investing if you're a beginner! In this class, you will learn the fundamental principles of how to invest in stocks and shares. We talk about: what the stock market is, why company share prices change, how news affects a companies share price, what dividends are, and how dividends are useful and what you should research before you buy shares in a company or invest in the stock market. Investing in Stocks and Shares. Stock market investing. Investing in UK (ftse100) and investing in USA (Dow Jones) are 2 common indexes. 

The aim is for you to know the principles you will need to abide by in order to make an informed investment decision on the stock market. I try to cover all investing basics as if you had never heard of the stock market before.

INVESTING For Beginners: How To Start To Investing in the STOCK MARKET and The Basics of Investing

Music Used: Chill Uplifting LoFi HipHop Music (No Copyright) ATF Pieces - Extended Version "After The Fall" Track Name: "Pieces (Extended Version)"

*Disclaimer*  I am not responsible for financial decisions you make, do not make an investment decision based on anything i say, My advice in this class is for beginners and is not thorough, I am not a trained or qualified financial advisor. This lesson is not considered licensed financial advice. It is purely for educational purposes only.

Transcripts

1. Investing for Beginners - Welcome to The Class: welcome to investing for beginners. Now in this class, I'm going to be taking you through some of the basic tools you'll need to start understanding the stock market and to start making informed investment decision as a beginner. So I'm Dylan and I recently finished studying for my BSC economics and finance degree at the University of York University of Sydney. Throughout my degree, I took several different modules that little related Teoh to the stock markets of the financial markets. I mean, first year I wrote on my general economic foundations, which is great for trading. In my second year, I studied at the University of Sydney. I took classes on the economics of financial markets, business cycles and asset management. And then when I go back to the UK, I learned all about the structure and regulation of financial markets on about the principles of corporate finance. Now as well is this Over the last 34 years, I have been trading myself on throughout that whole time. My degree. I've learned so many things. I wish I knew when I first started investing, and in this class I'm going to be sharing with you some of the knowledge. I've acquired some of the knowledge from my degree, and it all relates to help you build up the fundamental tools you will need to start investing in the stock market on this class is aimed at beginners. Check out the class project well. I want to point out a few of the different various factors you think could influence the stock on has done in the past. And then finally, as a disclaimer in this video, I'm no offering financial advice. Do not make investment decisions based on anything I say in this class or ever do. I'm no responsible for any financial losses. This is purely an informational class room would be sharing with you some of the personal things. I wish I knew some of the things that I have learned from my degree and let's get on to close one 2. Understanding the Stock Market: the stock market is where all publicly traded companies are bought and sold. Now, why would a company want to go on? The stock market basically enables them to raise capital and raise money to invest in their business. To grow on Often raising funds through the stock market can be cheaper than getting a bank loan, and subsequently it helps them accelerate growth in the business at a cheaper rate. In general, there's no trading in the weekends. In the stock markets, there's different stock markets with different parts of the world. There's different indexes on all of them have different operating hours now surrounding the stock market. There's so many different rules and regulations such as institutions get more time to trade than let's say people like me. But I'm not gonna go too much into them today. Now, to understand the stock market, we first must understand what is a big change in a company's stock price. Versus was a small change, So a common mistake that sometimes people make when they get to investing is they get caught up in looking at what the dollar change in a day. Waas. They don't look at the percentage change. They look at the dollar change now. The reason why this is bad is because a dollar change doesn't really give that much of an accurate representation on what the day you return is how they're comparing this to the percentage change. This gives you a much more accurate representation of what's happened in the day. The returns. You can expect more less. For example, let's consider a stock. Trading at $10 in the day increases $1 to $11. Now, this is a 10% increase in the day. Now, you could also consider a stock this valued at $1. It increases by the same amount as the other stocks. Okay, so it increases why $1 on this $1 is actually 100% increase in stock be stopped for the day . So clearly stop B has doubled in value. You've made double the money where stock A has only gone 10%. You make 10% more money so you can see one of them has massively greater returns, despite both companies in this hypothetical situation going up by $1 running. So the first basic lesson of learning to trade is that percentage change is king. That is key for interpretation on lots of other things. Now, obviously, the nominal value of the stock in the nominal change is very important as well. But that's more for when you're advanced at the start, you want to be focusing on percentage change. 3. Why Stock Prices Change: now, the next phase in learning to trade is all about understanding why stock prices move and jump around. Now, If there was a clear cut answer to this, everybody would be a millionaire. So in general, a company's stock price is generated by looking at its future prospects, its future growth, its future revenue basically all of its future potential on things that can affect this future potential is news. Now these news shocks could be positive, negative on. Likely they will always affect the stock price. For example, if a company was revealing its quarterly financials and it said that its profit for Court of One of the Year was greater than it expected, this source of news that has got profit greater than they thought it was positive on subsequently kind of proved the company is more profitable than people thought. It kind of proves it's got great growth prospects in the future if it's got more demand than they thought on this kind of signals that the company has potential to grow in the future on investors. My see, this is a great opportunity to get in a undervalued stock. They buy issues up all thanks to this kind of positive news revelation that the company had higher profits than they thought. News is really a great general time to describe what influences a company stock price. I mean, there are so many different factors that I could not physically cover in this video that I do not know myself, but a general bubble. Time is news. And, of course, there's always a connection between the jump in the company's stock price. On this, the importance and the size of the new shop wasn't expected was not. Was it out of the blue, etcetera? Etcetera? Obviously, news influences a company's stock price. Now. From this, you might get the idea that I can see on the 10 o'clock and use their companies made loads of money. They're released late last night. I could wake up by that company's stock, and then it would go up. That's not how it works, because there's a thing called the efficient market hypothesis, which basically means that as soon as information becomes public that very second before anybody can act on it. The stock price already accounts for that information. I don't have any clue how it works. It's just a theory, and it basically means there's no arbitrage opportunities. And the reason how this is ableto work is the when trading is done for us is that a stock price jumps around in the night time. When we're sleeping on when we wake up in the morning, it's Logan a different rate than what it closed at the previous day. Andi also regards to use it. That use doesn't have to be specifically related to the company. It can be used something like that, say the U. S unemployment rate decreased massively. Thio Thio I don't know 1% that that kind of will have a really positive impact on the whole economy because it shows that you know the economy. Everybody's working, Everybody's got money, the economy is looking great. Then people are gonna be spending money, and subsequently stock prices will reflect. How you know this new news that the unemployment rate is low could imply that there's gonna be hired a month for goods and services. Higher revenues for companies, high profit and subsequently that decrease in the unemployment rate will send company stock prices up. So it works really in a very broad sense. Another interesting thing to consider is that there's also it's speculative stocks now. Speculative stocks would be ones like Virgin Galactic, Virgin Galactic are a space tourism company in the works. They don't currently make any money. They don't have any revenue that I have any profit. And it's really kind of hard to judge what this stock price of the company should be because we're doing the business of the moment. They become publicly traded fairly recently, they needed to raise the money to continue business. So it's really just the guessing game on. It's really speculation and hype and supply and demand that rise to stock price up and down , and you find that speculative stocks are normally more volatile than let's say, established company stocks. When it comes to speculative stocks, what moves them around, as we're saying generally, it's hype. For example, when Virgin Galactic recently announced that running's their earnings, whether had nothing to show for it, So you can't make any judgment cause on if the stock prices over on the values. But they release the information about NASA contract they have, which is gonna work towards developing hypersonic travel on because of that news revelation again, As we talked about earlier this, speculators decided that the company has a lot of good potential again. Onda hence went to buy into the company, speculating that in the future they're going to do great things and the stock price went up once they're released, that information on it was purely speculative because the details of the contract were not announced. The company's not fully operating as a business yet, so it's all speculation. 4. Case Study: Easy Jet Share Price: Now at last class, we looked at how information and news revelation really drives stock prices on. Did in this episode, I thought would be greater. Look, a case study in terms of easyJet now, I've personally been training easy after the last two years, buying and selling them, obviously before the pandemic on then during the pandemic on I feel like there are a great example of how the information on their covert information surrounding that sort of hole bubble has really influenced the stock price. Now, obviously, Kobe has influenced every start price under the sun as easy as a travel and tourism company . They are clearly most affected by any developments within the Kobe situation. So easyJet are a low cost airline fly around Europe. They have very low profit margins. Parsi, and to be profitable, they have to fill up the whole entire aircraft. So right here on the screen, you see a chart. Now this chart represents easyJet's share price over the last four months. Now you can see the 17th of February. The share price was trading around 15 50 £15.50 on there is a huge drop all the way down to about £5 from about the 17th of February to March the 10th. Now, the reason for this is that this is one the first wave of cove. It started shutting down economies. It started spreading and subsequently cut countries entered locked down. Now, as they had to lock down, it basically meant the international travel amongst different regions on travel in Europe was cut off. There was so much uncertainty around when flying would resume and everything like that. The store prices and especially the local style. I fell dramatically because there was no way there's no income anymore for easyJet. They weren't flying anymore because of the lockdowns. Now, from the 22nd of March to the 20th of May, easyJet was volatile and it was consistently low. Now the reason why I was consistently low was due to the fact that there was so much uncertainty surrounding travel and tourism in the industry of whenever would return. How severe was covert that there was no kind of foreseeable going back to flying, etcetera, etcetera. So prices stay low that n reached zeros. Investors still hold some kind of expectation that eventually flying with a car again But you can see they really did remain low for a long period of time because of the uncertainty of when flying was gonna car again on when lockdowns will be lifted. Now, on the first of a four, you see, that was the biggest increase. Within a week, they went up from about less than £5 to £7. Now, volatility like this is normally unprecedented and unseen. But these conditions are so rather than has happened on. The reason for this big bomb pop was there was some positive vaccine use surrounding covert 19. As soon as there's Positive Cove in 19 news, share prices tend to jump upwards now. In this case, it was progress towards a vaccine and supposedly made on. Obviously, if the vaccine is out there, everybody could get vaccinated. Travel and tourism could go back to how it was before easyJet will start flying around Europe, start making money again, start having you know profits and subsequently become a profitable company again. Share price increases as the uncertainty continued in the vaccine. News was good, but not good enough. It's slowly started to fall again as every kind of month that goes on the company is burning through cash. It's not making any money, cause all of their planes were grounded. So essentially, the longer the Kobe went on without positive news, the more the share price with deteriorate on on the 20th of May. Finally, some good news came when countries started lifting lockdowns. More progress toward the vaccine was found on. There was hope that flying would be resumed on. As this essentially occurred. Some fights were assumed. The stock price shot up again, up to just over £9 on This was kind of really the peak of when everybody was really optimistic. It appears that flying would resume since that £9 point. Once again, more news has been revealed that there's a second wave going around Beijing on that second wave has subsequent caused another dip. So you can see in general with this whole cove in 19 years and how use in general really does take, especially in this situation when it's directly related to easyJet. How they use really does dictate stock price 5. A Lower Risk Investment Strategy: Now, before you start investing, it's always great to have a strategy. Have something in your head that you want to achieve. Onda Way that you can minimize the risk while maximizing the return because the aim is to make a profit on to make profit. You want to kind of do it without the risk of losing all of your money, especially as a beginner investor. So the way you can actually do this is by a thing supposedly in the record portfolio diversification. Now your portfolio's list that basically all the stocks and shares you own on diversification as you know it means kind of having different elements in different, different features and stuff like that. So what is portfolio diversification? Essentially, it basically means holding different stocks in companies from different areas, different sectors, different industries on It also means, let's say, I wouldn't put all of my money in one company. I may be put into company, so in terms of supermarkets, I wouldn't put it in. Let's say you want Tesco. I put a bit of Tesco, but in centuries and then I wouldn't just have supermarkets in my portfolio, maybe have some supermarkets and then I look a different sector, maybe travel and tourism. Wholesome, easy general Ryanair on Then I might die 1st 5 further and have some oil stocks. Now what this basically does it hedges the risk. So let's say if it wasn't very diversified, it all. I was just holding traveling tourism. If travelling tourism fell dramatically, I would lose all of my money. However, if I had a diversified portfolio, let's say, in travel and tourism, oil and supermarkets if travelling tourism fell. I still have 1/3 of my portfolio in supermarkets and 1/3 in oil that for the fall in travel and tourism will be bad for me. But it wouldn't be the end of my portfolio because I divers to find it. Then when it comes to intersected diversification, if, let's say, sticking with travel and tourism. My held easyJet on Ryanair to low cost airlines now oppose. If I don't want money, easyJet and they had some sort of, I don't know, something bad happen to them in their share. Price crashed, I would lose a lot of money, whereas if I held Ryanair on the easyJet in the same kind of airline sector if easyJet crashed. I hope Ryanair as well then I wouldn't lose. As much as half will be in Ryanair. Half would be an easyJet. The bad news of one company wouldn't bring down my portfolio as much on if the sector does really well in airline start to do really well because I'm holding to airline stocks in my portfolio. Value increases. So that, in essence, is divisive vacation. The aim is to reduce risk while still having a high potential for a return. The reason why this is a good strategy is because, as I've said, it reduces the risk and reduces the chances of you losing money on. It's kind of like the idea of Don't put with your eggs in one basket. It's been proven that, you know, if you hold ones as well, that's a great way to diverse, viable voter. But I have been more complicated. Andi, in general, you really don't want to be risking losing all your money because it's no good feel for your life were health or anything like that. So yeah, that is one popular strategy 6. Do This Before you Invest... (KEY!): so so far, we've looked at how to interpret stock prices, how to kind of understand why they move around. We've looked at a case study. We've looked at investment strategy on. Now it's really time to look at what we should do before you buy a share. The simple answer is lots of research and the Nance's. Now there is two different types of analysis. Fundamental, which basically looks at kind of a general economic outlook of things. And then there's technical, which I won't get into today that is really looking at, like upward pressure, downward pressure on the stock prices and really kind of using computer programs. Teoh determine if a stock price is going to increase on or it's basically similar what Bush use. But let's stick with fundamental analysis. So research is key to determining what company could potentially be profitable. And it is kind of a great way to reduce risk again on increased profitability. Now the aim of buying stocks and shares is to increase your own personal wealth. Now, how would you do this? Essentially, if you bought a stock $10 it went up to $15 I sold it I've increased my own personal wealth . Now a company's value may start to increase or decrease the reasons we previously discussed . Maybe the industry is growing. Maybe it's becoming more successful, more popular. Maybe the company has a really strong balance sheet where year on your own year is revenues are increasing, his profits increasing or stuff like that. And it sounds very complicated. But there are so many different factors that affect a company's stock price. I could not physically go over them in this video on, we discussed all these sort of news revelations that affect a company's stock price. Some things you might research before you buy a company is looking at the economy operation . You might look at the industry, the sector performance, its balance sheets or its revenues growing. If it's probabilities growing, is it going more competitors? Is there any regulation coming out that could harm the company? Is the election happening? What type of government is going to be in office? You know, there's so many things now I would look at so many other fact. This is what is thes on Dino. It takes up time, but it's definitely worth it because all of these factors you should research will help you come to an informed decision about company. What the more you research, the more confident you could come on, whether it's going to increase in the future or decrease in value. Really the best way to determine what factors you need to look at in determining the future of a stock price, whether it's going to increase or decrease what you really have to do, is follow a stock price on follow its news for like a few months on. Then you start to realize all the factors that affect the stock price, and then next time you go to make a decision, you look at them same factors that previously affected and others on they will help you kind of make a good decision. 7. What are Dividends?: now in this class, we're going to talk about something that as an investor you will hear a lot. People are always talking about dividends. Now, when you buy a company, in theory, you become a part owner of the company. Now, if a company's making profits, the profits should go to the owner. Now, if you're a shareholder, you are a part owner, so you receive when a company makes profits part of the profit. So if a company is making profits and it pays out dividends because not all companies do, then paying out dividends can be seen as a very attractive opportunity in prospect for investors. Now, dividends paid out, maybe yearly, semi annually, even quarterly. It really depends on the company, however. Obviously, dividends are great, but there are downsides to them on one of the first ones is that when a company pays out of dividend, it basically means that it has less cash flow within the business because it's taking money that's made and it's not reinvesting. This money is paying out to the owners and the shareholders on this subsequently means that the business has less money to reinvest in itself. On that my slow down or reduce its growth prospects for the argument, like your company, like Accardo, which is a very profitable company. Their argument is that they reinvest all of the profit they make into the company subsequently, this will help the share price increase more in the future because they're using the money to reinvest and grow the company further and further to increase the share price so they don't pay dividends, They say. I'll give you greater capital gain in the long term. Now, if you're holding shares on Ex Dividend Day, which you can find out by Googling online, then you are entitled to receive part of the profits they make. On theory states that around the ex dividend a share price before Ex Dividend Day will start to increase relative to the market. Let's say, because or the investors realize this company's about to pay out dividends on, they might decide to buy some of the company's stock so they are entitled to receive the dividends. However, off the Extent Day Theory predicts that the stock price will for proportional in some way to the previous diffidence that was paid out. Now, the amount of dividends you received from a company are given to you. If you just Google Online and look at the dividend yield. For example, Apple has a dividend yield off currently no 0.97% which would mean you get no 0.97% of the stock prices value for every share you hold. Now there are investment strategies that rely purely on dividend and dividend growth on a company that is increasing its dividends over time. I paying 1% dividend the first year, 2% next year, 3% 4th year. It really shows a healthy company that's making more and more profit. And sometimes that can be used as a good signal that the company is healthy, stable and a good investment opportunity. Dividends are also a great way. If you do have liquidity needs to get a bit of cash in your pocket. If all your money is tied up in investments on def, the interest rates are really low. Investing in a company that pays a strong dividend yield might be a good alternative to having all of your money in the bank. There are so many different things that dividends and dividend payments can be useful by don't thing are a make or break between a good or bad investment. I mean some. In theory, you can learn about the dividend discount model basically values in company stock prices. High period zero as the dividend payment in time period one divided by the interest rate. Now that obviously that's a very, very basic model on There are several models that build upon this principal that dividends are what drive the value of a stock price. But obviously companies that don't pay dividends I know what zero so is. You know, dividends are a great indicated to get based idea of a company's performance, their health, the potential growth prospects and their potential price. That's a rough overview of what dividends are on what they could be useful. 8. I wish I Knew this Before I Started Investing (KEY!): now in this class, I've wanted to talk to you about a few things that I wish I knew when I very first started investing. Now, over the years, I've learned so many different things on nonetheless, one of the biggest lessons I've learned is that going into a share of buying once you've researched it with a target price for what you want to sell out is key on the same. You wanna have a target price for what you want to buy the share at before you buy it on. Essentially, having target prices really helps you stay out of the hype bubble where if your target to sell a stock was $80 on and we reached $80. But then it started going up a bit mawr and you didn't sell, even though your target been reached because of the height of the stock and then, a few weeks later, a crash down. That wouldn't be good. It really is an ideal for your healthy or your investing strategy. You don't want to lose the money. You should have just taken the profit on. Having a price target really does help. You kind of keep in check about when you should take the money. Is the company overall undervalued on it? It's a really great way to stay on top of your investments. So definitely do have targets for what you want to sell stuff out and targets for what you want to buy up, because this brings me onto the second thing. I wish I knew before I started investing on its to do with foam. Onalfo Mo is the fear of missing out. So when you sat price target, you don't get a kind of involved in this whole phone world. Let's say I wanted to buy a stock on my target was $10. Currently, stock is trading. It's $11 on it. Never reached $10 but in the first week of me monitoring the stock, it starts to go up to life. $11.10 $11. 20 Now I shouldn't be buying this because it hasn't really reached my price target for why valued the company at. But because I see it's going up and up and up, I get really scared. I'm gonna miss out on this great opportunity, and then I bite a price that I don't want to buy a purely because I was scared of the potential of missing out. That is no idea. Little on you really want to be. I careful of this whole fomer business because it's so easy to get caught up in it. I've done it. Many people I know have and stuff like that. Finally, I definitely say creating a research document which contains all of the information you've discovered while you've been researching the stock in one single document is key because it basically means that when you buy or sell a stock, you have a reason to buy or sell it. Because if you was to buy a stock or and you kind of did it randomly and it went down and you lost all of your money, you feel like I'll be awful. Whereas at least that that happened and you had some justified reasons, toe why you bought the stock, you would feel like a I made a mistake. I can move on from it, whereas if you ran any guest and lost your money, it's really hard to move on from now on. The same for selling. If you sold a start randomly and it went up massively after you sold it and you have no reason to sell it. You would really kick yourself. So really, having a research document is key for for helping you make rational decisions on making sure you don't punish yourself after a decision is made. 9. Mental Health and Investing: now, Finally, following on from last episode, I thought it would be a great time to talk about mental health. I know you don't see this a lot in relation to investing by investing. It's such a dangerous game. You could be making loads of money on the next day. You could be losing it all on in the current situation with Cove, it markets chippy, choppy, choppy, and investing can sometimes make your move go from normal to down here to up here. And it really is about avoiding foam, avoiding checking them every second, making sure you may justify rational research decisions that really do help. You kind of stay mentally healthy to make healthy decisions and to know let it take over your life. Obviously, some people can handle it, and some people call it. I'm probably in the middle, and some people do this on a daily is that job? But you know, some people are investing with money to spend. If you're investing with money that you've had to work really hard to get, you really. It can be sometimes a tough prospect losing money, which you may well do so really making sure you don't get obsessed with it, I say, especially as a beginner, making sure you kind of keep in mind the foam. Oh, on the research principles you need to abide by, especially for a beginner. It will really and honestly help your investment game. Yes, a good thing to bear in mind. 10. Recap and Conclusion - Thank you!: Thank you for watching this investment class for McGinnis. I hope you have learned a lot. I hope you enjoyed. Please do Let me know of any feedback you have in the discussion down below. Leave a racing. If you did enjoy and to recap, we learned all about how to understand why stock prices might change. We learned about what is a big or small jump in the stock price. We looked at Easy Jet as a case study, we looked at an investment strategy to reduce risk. We looked at some elements you might research before you buy a stock and how important research is. We looked at dividends and how they could be used in various different factors and what they are. Finally, my I gave you my top tips. And then we looked at how to stay healthy mentally one investing in rough times on. I am, Yeah. I want to say thank you very much for watching Please feel free to check on my YouTube channel where I have Mawr investment videos on Michael Rodeo. And to find that along with my portfolio type in students blog's investing, I will be doing a more in depth, more detailed, more advance investment class here on skill share very soon. So please do follow me for that. 11. (BONUS) My Investment Broker: now, as a quick bonus, many of you guys have been asking me what my investment broker is. Who do I use now in terms of investment brokers? Some of these investment brokers, they charge commission every time you buy or sell a share, so they might charge £10 for you to make a transaction. Now, if you're investing a £1,000,000.10 pounds is nothing. If you're investing £100 £10 is 10% to buy £10 to sell. Yes, Yes. You spend £20 on transaction fees to buy and sell a share. And if you are invested £100 a very reasonable amount, then you're gonna have to make a least 20% profit in order to recoup the transaction costs . So what I like to do when I invest is I use no commission brokers. This means that when I make a trade, they don't charge me to buy or sell it. They just take the normal stamp duty off, which is a 20 p in tax. Now, brokers that do this are trading 212 and free trade on by. I'll leave the link to trading 212 down in the description below. And if you do want to sign up to one of these and that of your broker, I'd recommend if you're kind of starting our invest that you don't wanna be investing too much anyway, so and no commission low, you know, Look, no commission, low value trades are probably the way you want to start off. So I definitely recommend using trading to one to my link is in the description down below . And I do believe that if you click my link in the description down below, sign up. Using my link as a sort of promotion, we both get a free share. So, yeah, go and do that. If you want to sign up saying you have to if you want to, that is who I use. Everyone's been asking me eso Thank you very much for watching this class. I've got something called Sandy Outro. So you best listen to that and you see, soon