Stock Market Success in Easy Steps | Brett Hargreaves | Skillshare

Stock Market Success in Easy Steps

Brett Hargreaves, Software Architect and Investor

Stock Market Success in Easy Steps

Brett Hargreaves, Software Architect and Investor

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30 Lessons (1h 51m)
    • 1. 1. Welcome to my course

    • 2. 1.2 Course Introduction

    • 3. 2.1 Why Invest?

    • 4. 2.2 How Much Should I Invest?

    • 5. 2.3 Savings and ISAs

    • 6. 2.4 Bonds and Gilts

    • 7. 2.5 ISAs and Pensions

    • 8. 2.6 Funds

    • 9. 2.7 Stocks and Shares

    • 10. 2.8 Using a Broker

    • 11. 2.9 Tools and Sites

    • 12. 3.1 How to Find Shares

    • 13. 3.2 Using the Internet for Research

    • 14. 3.3 Share Top Lists

    • 15. 3.4 Broker Tips

    • 16. 4.1 Analysing Stocks - Introduction

    • 17. 4.2 Comparison Chart

    • 18. 4.3 News

    • 19. 4.4 Epic Charts

    • 20. 4.5 Share Price

    • 21. 4.6 Market Share

    • 22. 4.7 Profit

    • 23. 4.8 Dividend History

    • 24. 4.9 Yearly Statements

    • 25. 4.10 Final Research

    • 26. 5.1 Risk Reduction - Introduction

    • 27. 5.2 Remove All Emotion

    • 28. 5.3 Spread Yourself (Diversity)

    • 29. 5.4 Know what you Know

    • 30. 5.5 Research, Research, Research!

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About This Class

In my course I’ll teach you;

  • The basics of investing – what exactly ARE stocks, shares, ISAs, SIPPs bonds and gilts?
  • Where to find stocks that are growing and have real potential;
  • All the FREE tools you need.
  • How to perform SIMPLE analysis of a company – get to the core of what you need to know.
  • How to separate the good investments from the bad
  • How to reduce risk as much as possible to stop you from losing it all on one bad deal.

I’ll assume you don’t know the first thing of investing, that you don’t have time to spend all day scouring the financial times or glued to stock price tickers.

By the end you’ll know your PE Ratios from your Market Caps – and you’ll have the confidence to invest without putting you house at risk!

Meet Your Teacher

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Brett Hargreaves

Software Architect and Investor


I've worked in IT for over 15 years as a developer and architect and I've been programming since I was 10. I've worked as a freelancer and as a consultant for small companies and some of the worlds largest IT providers - including Fujitsu, Cap Gemini and Capita.

In that time I've worked with a range of development tools from BASIC to PASCAL, Visual Basic, C#, Swift, Java, ASP and ASP.NET. I've built solutions with pure code, Dynamics CRM and Sharepoint - I certainly don't get bored!

I love learning new technologies, and more recently I'm enjoying sharing that knowledge through books, blogs and of course training courses.

As well as the IT side, I'm also an avid amateur investor and have self managed my own pension portfolio. This means I'm constantly read about ... See full profile

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1. 1. Welcome to my course: Hi there. My name's Brett Hargreaves. Welcome to my cost. On succeeding on the stock market, I'm a UK based software developer. On around four years ago, I had the opportunity to transfer around £10,000 from a company based pensions game into a private, self invested pension fund. During that time, I have seen my phoned rise to nearly £30,000 I've managed to do this without investing any more capital whatsoever. I want to reclaim on this. I haven't spent years studying finance for mathematics. I don't spend hours looking at charts on a plan, complex algorithms trying to predict the outcome of the stock market. And I certainly don't get up at the crack of dawn every morning toe, watch the news and stay glued to the stock tickers. All I do is spend a few minutes each day, ensuring that none of the companies I'm invested eight have hit the headlines with up news . And every now and again I will rebound my portfolio to get rid of some poorly performing stock in favour. Something more exciting. There's no magic formulas. I'm just a ordinary person who picks good stocks based on a bit of common sense and in this car's God show how you can do the same. Finally, I just need to state that online cash stop based investments will go down as well as up on beware any course or book that try to tell you with their eyes. So with that out the way, I hope you enjoy my costs on Let's get Started. 2. 1.2 Course Introduction: Hi there. Welcome back to the course. Okay. Before we get started, I want to discuss what this course is, Andi. Perhaps more importantly, what it isn't so, First of all, what I'm not doing is promising to turn $1000 or £1000 into a 1,000,000. Beware of any courses that claim to make you millions. To achieve these feet either takes a lot of capital. Start with our lots of lock on often involves a great deal of risk. This course is not about charting. This is the process whereby you analyze to stop chart and apply certain rules to predict where the stock will move next. It's bit like trying to predict the lottery pay based on past numbers. This course is not about day trading. I'm assuming you want to keep the day job like I do enough to spend all day long watching the stock markets move a few points not to work out. If you can make a profit or not, don't get me wrong. I know some people make quite nice living this way. However, it is relatively risky and again requires a bit more capital and has been done. Is a full time job anyway. The point is, this isn't what this course is about. This court is not courses not about in depth technical analysis of the market. I won't be baffling you with confusing technical terms. Finally, this course is not about CF D's or contracts for differences or options trading. I won't go into what these are right at the moment, with the fairly advanced on investment practices. Except what I will say is that you can make big gains from less capital. But where is with normal stock trading, you only lose what you invest with CF DS and options. You can often lose multiples more than what you normally invest. These air usually the harvest stories that you hear when people really lose the shirt. Okay, so what is this course about? This course is about investing your money wisely. It's about taken a measured amount of risk to get the best returns. Then you could get from a normal savings account. It's generally about investing over the long term, and by this I mean buying stocks with the view to holding the month them for a few months, or maybe even years. Generally speaking, I like to have a long term plan of five years. Plus, it's about how to pick the right stocks that hopefully won't completely crash, taking all your money with them. And if they do, how you content yourself in these instances, although I won't be baffling you with terms, I am going to cover the basic terms that you need to know to really understand what they mean and, more importantly, how that pertain to the company or stop that you're looking at and how you can turn that information to your advantage. Finally, this course is how I managed to nearly triple my money off a few short years, and I did this without paying in any more capital. I essentially did it by practicing on the stock market with some money that I wasn't too worried about losing because I never felt like I got it in the first place. Anyway, The point is, I did it in my spare time on I wasn't having to worry about day to day price movements, and that's the real of the crooks of this course. It's about been able to investing stocks, make some good investment decisions, but not be absolutely paranoid that you need to be watching that stock ticker all day long . Okay, so I'll quickly run through how the costs going to be broken down. First of all, will go through a quick investing. One old one in here will cover what different investments you can take. A ice is our pensions and so on and so forth. We'll look at why we invest on the different taps investment based on while we invest on also exactly what stopped, are and start looking at how we actually read charts. Well, then, getting to probably one of the most important part of the cost, which is risk production. It's about the things that we can do to reduce our risk now. Not so say that I say reduce and not remove. No one can predict the future, and therefore there will always be an amount of risk. However, using the fruit few simple, perhaps, is We can reduce this risk as much as possible, and we do this early on in the course so that hopefully can feel a bit more comfortable and not feel like investing just a game of roulette. Next, we'll look into how we actually find stocks that might be worth investing in, or at least what might be worth researching further. You don't need an expensive subscriptions, just a Internet connection, maybe a newsagents, our shop that sells newspapers. Then we'll look at how we actually investigator stock. So once you found stock that you think you might like the idea of, how do we know if it's actually worth investing in the key? Here is research on a card stress that enough on Leah Fool dumps all the money in a company on someone else's advice. I'll show you what you need to look for in stop that makes it look attractive either off the time. Hopefully, it should do well. And maybe what the danger signs could be that maybe should stand away. Finally walk over the rest of the stuff, Sir Charles, what to do with the shares when you got them and, perhaps more importantly, when you should sell them on, went to hold on or how to re balance your portfolio. I'll also be applauding some useful ducks in the in section, along with any of the little tidbits of information that just might think you like on as the course goes on as people raise questions in the forums are lot more lectures at the end to answer people's questions. Okay, let's get started on the first section investing 101 3. 2.1 Why Invest?: Hi and welcome back. Okay, so we're going to look investing 101 The first thing we need to look at is why we invest now. People investment for a variety of reasons, but these can be large to split its two kinds, short term and long term investing. Long term investing is things like pensions are saving for a rain day. It is no real end goal, more sort of in pensions. Short term is more about saving for a car holiday or maybe to stretch a deposit on a house . As this cost foxes on longer term investing people seven for retirement and for the ready day scenario would benefit the most. In theory, you could say for the short term things using stocks. But given the relative volatility at least over the shirt term, I wouldn't necessarily recommend it. So the next question might be why invest in stocks at all as opposed to just say, a normal savings account? Well off the years, the average stock markets have outperformed most of the investments. Andi, I think one of the reasons why it stuck investment has had a pretty bad rap, especially over the recent years. is because everyone's heard these horror stories of how someone they know has literally lost the shirt on about investment. However, over the long term, investing in the stock market has produced better returns than other investment mediums on When things do go bad, either horror stories that you hear it's used because of bad investment strategies. So just investing everything into one company are trying to make a quick book in the short term I with day trading or putting the money in a really risky investment. Or perhaps sometimes people use more advanced techniques such as options and CFDT like toe briefly mention dearly, where basically the amount of money have a risk is more than you've actually invested. If you look at the past 20 years, cash on average would have made you around 3%. Whereas if you look at the foot 2 100 in the UK, they've averaged around 5.4% now that's not a huge amount, but it's still 2.4% more than if you just stop your cash in the savings account. And there are funds out there called but two trackers or in America, Dow Jones trackers and so on that track, just the individual stock markets and will generally rise and fall with in line with them. However, if you start looking hedge funds thes thes of funds where professional investors actually analyze stocks for you And look at these things they've averaged over the past 20 years around 8% No, in the next lecture will actually have a look. It just what sort of difference these percentages come make. Now, what did things you have to ourself is wide. Stocks generally outperform cash, and that's because stocks actually based on companies and companies want to make money. Cos General have assets either in cash or property or products has provided you invest in the right companies, you will always make money. 4. 2.2 How Much Should I Invest?: key question that often gets asked by any potential investors. How much should I invest? Well, that's a tricky want to answer. Technically, £10 will be enough. However, any trade you make is going to cost you. You see, in order to buy shares on stock market, you need to go through a broker, and most brokers will charge around £10 or $15. So this means when you buy £10 worth of shares or a £1,000,000 worth of shares is pretty much gonna cost you the same. Now, some brokers might charge you less on bigger deals or, if you do lots of deals within a month. But given the fact that you're going to be doing this as a part time basis, that that's pretty much an average charge. So because of this, it means if you would just say by £100 worth of shares and your charges were £10 you're going to be 10% down on Do you need to make that back up in your shares before you can start making a profit. Conversely, if you buy £1000 worth of shares in the only cost you £10. Well, now you've only got 1% eating into your profits. You. The key factor that you really want to consider when you're building a portfolio is that you really need spread your investments out or diversify. This is a key ingredient to risk reduction. Yeah, Giris is that if one investment doesn't perform very well, then hopefully your other investment will take up the slack. Personally, I start with £10,000 I understand this isn't a fantastic amount for everybody. If you only had, say, £1000 then you could probably get away with that. Because then I would say, spread your investments of around £200 perv investment. Your fees still gonna be relatively high it around 5% per trade. However, it at least gives you a way to get started. So dance to the how much question is really as much as you can afford. So one final thing to add to this discussion is if you don't have much money now to get started, but you really want to get involved in stocks and shares is to look it funds or hedge funds Now what hedge funds often allow you to do is, rather than pay big lump sums, they allowed to invest a fixed amount each month. Generally, the new minimum charges around £25 or $25 and the idea is with the fund. They are managed by companies on the fund manager will take all monies paid into it and spread it around targeted companies that they themselves have chosen based on various criteria, and these are a great way to get started. The problem with those, of course, is that you've no riel choice in the shares that get chosen, then therefore, in relevance to this course, it doesn't really align. However, as I say, if you want to get started and you want want Teoh, carry it for you and make monthly payments, then they have a great way to at least start getting your feet wet. To finish this lecture, what I'd like to do is take you through building a sample forecasting spreadsheet. Now why am I doing this quite often, when people ask about investing and how much to invest and went start is that it's very difficult to really understand Wired to say you should start investing as soon as possible , or how much until what I generally like to do is build these branches so that you can forecast through the years 10 2030 years, play about with how much would want to invest in the start what it would work out. If you invest in a monthly basis and so on and the spreadsheet a really great way of doing that, I'm going to talk you through how to build such a spreadsheet or you need is a spreadsheet . I'm going choose Max off to Excel. However, there are lots out there that you could use. You could use Excel Online. You could use numbers or for Mac OS X, or you could even use Google sheets. There are lots of options. Let's get started and see how we can build up a forecasting spread. Shoot gives a better idea of what investments mean over the long term, so I'm just starting a simple spreadsheet here and festival our first week comment columns we're going to have. We're going to have seeds. That's the amount we're going to start. If we're going to put a lump summing to start, we're going to put in a percentage of a yearly growth, what we think we might average and find, like we're going to have a calm to say monthly contributions. Next, we're going to have three columns here. We're going to have yeah, fund value. Andi Yearly contributions Now for the year. This is just year, one year two and so on. Let's quickly just go up to say 20. Actually, let's go to 30. Good, which puts him example, figures in here. So let's say we'll have a seed of, say, £10 a yearly growth off 5% on month contributions off zero. First of all, let's go into our first fund value, and I'm going to type formula in here. This formula is dollar be one, and that's what we used the dollar because that tells it to always use this cell here. That's great for when we want to copy and paste well, the other columns, and then we're going to say, multiplied by one plus dollar B two. So what this is saying is our fund value is going to be a our seed plus 1.5 See this column here because it's a percentage is actually no point No. Five that Let's just take that off to a general number and we'll see. That's no point, no fast. What we do is by adding, want that were saying, See value 10 multiplied by 1.0 fire, which effectively at 5%. And as you can see, that means that is now £10.50. Let's go to the next column, and now our former is going to be slightly more complex now. What we're going to say is, we're going to say B six push c six. So we're going to say the previous value, plus any contributions we want to make multiplied by once again one plus B two, which will do that to repress enter there. That's what he's doing now is it's taking our previous value, adding anything in there we might want odd and then again adding 5% on. So we've got that formal weaken basically copy that down through this column, and that automatically adds the marlak. Let's just change them all into a monetary value. And so there you go. So you can see here If we'd read to invest £10 with an average yearly growth of 5% then in 30 years, our £10 would be worth £45. 38 It's not. Doesn't seem a great deal boat again. We've only started with £10. Let's say we invested £10,000 with an average yearly growth of 5% and you can see in 30 years that would be worth £45,000. So, as you can see, the longer we invest, then the more it's worth, so it will look after 10 years, £10,000 we've made, say, an extra £6000. Where was 20 years with £26,000 so on and so forth. And in fact, if we carry that on, we can get a good idea with how that money builds up over time. Now you might be thinking, while that's a very long time in order to build money up, however generally for investments if their long term, for example, if you're looking at building up a pension, it's a great way to illustrate that the sooner you start, then the more it builds up. It also shows that just by adding moment, if we started removed the contributions it can again make a big deal. It's lest some calculations in tow, what year? The contributions. So again, what we're going to do, we're going to use formula here. This is so that we can just copy and paste and then put a single value here Foul month contributions. She'll do that. Same will just copy and paste that across all our columns a lower rose. Then, as we start adding in from all the contributions, we can see what kind of effect that house. So with the £10,000 investment, if you let's say you won, you were age 21 in here, where age 50 51. So 51 we'd have £45,000. However, if we just started investing £10 each and every month that £45,000 becomes £53,000 again , if we're pit by £200 a month, suddenly it took £229,000. So, as you can see by both increasing the term off which you invest and making regular investments weaken, increase this figure substantially now again, over fact, 10 year period. If this is a short on lawn, maybe a short term investment may be looking at for saving a deposit for a house or something like that, then it can make a bigger difference. But obviously not a substantial is that. But this is a good illustration again, like a safer trying to work out over the years if you were saving or putting money, for example, into a pension. Now, before I finish this lecture, I just like to say, Why did I pick 5%? While the reason why I picked 5% is because 5% is how much the Footsie 100 grew over the past 30 years in this example spreadsheet of her here, which I will make the spreadsheet available to you in the The Resource is Tub. I've actually fed in the growth each year since the footsie 100 was established. And again we can see if we put seed in £10,000 then by and started in 1984 which is when the foot 2 100 started by now will be worth £45,000 which is pretty much in line with what we put here. And that's just a classic example of how just consistent investment off a long periods of time in real terms really does work 5. 2.3 Savings and ISAs: Now that you've decided how much want you want to invest, we need to look good where we can invest. The most common form of savings is, of course, the good old savings account. As of today, 2016 interest rates are at an old time low in the UK Most banks won't offer you more than half a percent. That's half percent. Let's put that into context. If you invested £1000 then after a year you'd have made a massive £5 interest. While if you invested £10,000 you're going to get just £50 a year. So investing in a standard savings account, at least at the moment, is going to take you a pretty long time to afford that Ferrari. And, of course, then you get taxed in the UK we have something called cash ices. Now these are attacks umbrella, which means any interest you make is tax free. The rub is that you're limited to how much can put in an active anyone year at the moment in the UK that's around £15,000 which is know to shoving amount. Also know that that's the maximum you can pay in and one year, not the amount we can hold sway over the years. The parking building nicely. If you shop around, you might get anything up to 3% depending on how much you're willing to pay in. The difference between a cash isa on a normal izer is that with a normal ass, you know, made by stocks in a fund, that is, your money is used to buy stocks. This means that you run the risk of the value going up as well as down, just like with normal stocks. But with a cash, I said, this risk is taken away and you just get a guaranteed return. Basically, you trading the possibility of making far more interest for the security of not losing anything if things go bad. 6. 2.4 Bonds and Gilts: next up, we have bonds and gilts. Now, bonds and gilts are effectively alone. That is, you are loaning an amount of money. Corporate bond is issued by a company. Where is a guilt is issued by the government? That's right. If you get a government guilt, you are loaning money to the government buns and guilt. Pay back a set amount of interest and that specific dates throughout the term. Then, at the end of the term, you get back. Your initial investment bonds are considered less riskier than stocks and shares, but given that they are longed to accompany this still do courage some risk. For example, if the company folded, then you would still lose your money. Gilles being issued by a government, however, are considered virtually risk free. After all, it's very rare that the government would go bankrupt. Although it has happened, gills can usually pay pretty good returns as well. Again. You need to shop around at times when interest rates are very low. On a stock market is a bit turbulent. Guilt can be a very good way of ensuring that you're getting a good return, where we're still managing your risk 7. 2.5 ISAs and Pensions: Isis pensions and sips where we start looked investments that are tied to the stock market as over dimensions. Isis are tax free and to any profits amid a yours to keep, although you can only appear in a certain amount each year into a nicer, which in the UK at the moment is around £15,000. Usually ice is a soul of funds, but you can also trade your own shares under the umbrella of a nicer. When you buy a NASA is a fund. The issuer looks after it for you. They then take your money and put it in a pool of Monnet or fund with everyone else who was investing that particular Aissa did. Then use that pool of minute by a range of stocks and chairs on your on everyone else's behalf. Ashes can also abuse the tax free, embellished for your own investment, meaning any profits you receive when you sell them or gain them from dividends. I've also tax free. A normal pension fund is like an ISA, the company looking after your pension from combined your investment along with everyone else's on buy stocks and shares with them profits from pensions again tax free. But the big difference is that the money you invest into the fund is also tax free. This can even be done by, you imply, appearing into the fund direct from your pre tax cellular off. You painting yourself directly, you get to rebate on the tax you've paid into the pension. So, for example, if you imply pacing to the fun from your cellar and you say pay 20% tax than if you pay around £200 a month, the full £200 a month goes into the fund. If you were to take the money is cash is pair I e. What you'd pay into the fund would actually get tax at 20%. So after that £200 you get paid, you'd only actually get £160. If you painting yourself one, you get a £40 rebate on that amount of tax that you've paid on that money. A sip is the ice umbrella equivalent for function formed A. What that means is, the city becomes a pension umbrella. You get to choose and investing your own shares and pick the shares that you want. But you still get along. The tax benefits sip is basically an acronym for self invested personal pension. And if you're looking at getting into stocks and shares and you're not bothered about getting money out in the short term, So, for example, you're saving for retirement than sips or a great way to really get involved in the stock market with the tax breaks that you get from a pension. 8. 2.6 Funds: in the pensions Nicest section. We talked about funds, and in this lecture, I just like to go into a little bit more about what funds actually are. A fund is enough ring by a company to manage shares on your behalf. The company combines the money with all the other investors in the fund to buy a range of shares in the form manager. Either person responsible from intend. The front for you takes care of all the buying and selling on trying to make sure that it's invested incompetence that will return growth you can paint to a fund are there is a single amount or is a monthly payment. So funds are a great way to get involved in stocks and shares if you don't have a lump sum to pay in, the minimum is usually around £25.25 dollars a month, but it varies on the fund. But again, because your money is combined with everyone else's money as a whole, it means the fund manager gets greater buying power on a greater diversity of investments from smaller amounts paid in. There are often two types of funds income of accumulation income funds mean that any income generated by the fund is paid back. Chewing cash. These great if you want to invest your money and receive regular income from it accumulation is the opposite all profits that the fund makes reinvested back into the fund . A. Buy more shares into the fund and therefore your pot continues to grow further funds of a great way to get involved in the stock market without the hassle of actually managing the shares yourself. You're effectively trusting the experts do. We told for you they're the ones who get up at 6 a.m. On watch Bloom Goldberg and stay glued to stop tickers. Old day funds could also be a great way to get involved in a diverse range of markets. For example, many providers offer funds that invest in particular areas or markets. For example, emerging market funds, which may invest purely in countries as a clusters emerging markets. As an example. Funds include Asian funds, Japan funds, small cap funds and so on and so forth. The idea is that you get to invest anywhere in the world without the international tax issues associate with doing it yourself. In addition, the great because you don't need to work out about how to spread the risk, because this is old on for you. The funds of ideal when you don't have a great deal, amount of capital off a great deal, amount of time, or perhaps just want to get started on aren't ready to get involved in picking the shares yourself. But do remember, funds are still based in stocks and shares and therefore the value do go up as well as down . Many funds are general classed in certain risk groups high, medium or low, which basically effects where they might be invested. Finally, you can even use funds to buy into the property market in pretty much the same way that you don't have to put all your cash in tow one property or even purchase an entire property. Your money buys part of the overall fund that might be invested in a wide range of properties. Of course, the companies that offer these funds do it to make money, and so they will charge you a yearly fee. The fee will almost certainly be a percentage anywhere between half percent. On 1% is typical a note that this is the percentage of the amount you have invested, not the amount of profit they make. So if that phone doesn't perform very well in any one year and perhaps goes down in value, you still have to pay their fee. 9. 2.7 Stocks and Shares: at last we come to why you're interesting, the coughs investing in stocks and shares. When you buy shares in a company, you are effectively buying a part of that company. So if you have shares in Mark and spent a goal Google or Facebook, you actually own a little bit of that company. A bit of a terminology for you. The difference between stocks and shares is simply that terminology shares relate to the shares you have in any one particular company. I Google Facebook, where the stocks is more of a general term, meaning the shares you might own across a number of companies. Once you won't shares in a complaint, you actually have a right to vote members into the board by the board. I mean, the directors. That's right. Technically, you actually have the power to sack the M. D of M and S. Given that many of the bigger companies have millions of shares, an issue and you'll only on a handful, your actual control will be minimal. However, the most important thing, though, is that you're entitled to dividends dividends repayment made from the company's profits. Generally speaking, when a company makes a profit it will want to reinvest some of it to grow the company, keep some of it of cash reserves and pay the rest as dividends. If a company pays a £1,000,000 worth of dividends, for example, and there are a 1,000,000 shares in issue, then that means each dividend will be worth £1 each share. Sorry will be worth £1. The more shares you have, the more of the £1 you'll get in your dividend. Of course, public companies. That means a community that has shares listed on the stock exchange will want to pay as much in dividends if they come after all, the more dividends they pay, the happier the shareholder you and happier you are, the more likely you are to keep the board of directors in a job. 10. 2.8 Using a Broker: If you want share trading companies on stock market, then you're going to need a broker now. These days, there are lots of brokers available to choose from, and you can easily trade online. Brokers generally make them on it by earning a commission on each trade. Some brokers charge percentage of the trade but now manages charge a simple flat feet, the fees usually dependent on the number of trade you place, rather than the amount of each individual trade. As an example, the broker I use charges £11.95 for a normal trade. However, this would drop to around £6 if I place more than 20 betrayed in the previous month. Making a trade is usually very simple. You have a telephone, your broker or using online system by X number of shares at the current by price or sell X number of shares at the sell price. The buy and sell prices are usually a little bit different, and we'll get into that later. You can usually is buy or sell X number of shares or X number of pounds worth I. You construct your broked by 1000 shares or £1000 worth of shares it knows to help protect yourself, you can set something called a stop loss. Now a stop loss order is great to ensure that you don't lose too much money if things quickly turned sour. So if you own shares in ABC incorporated it say, $10 a share, you could place a stubble sought at $8. If the price drops below this point, it would automatically stop trigger a sell order now. No, this is on Lian order. The actual press that it would sell for would depend on the price of the shares at the time that order gets fulfilled. So you wouldn't necessarily get the exact A Zach amount you said Stone. However, as stated, it would stop you losing too much money if things went bad very quickly. Stop loss orders of our deal. For investors who can't react very quickly to sudden movements in the market, a limit order is the complete opposite. It allows to set a maximum pressure willing to buy a share out. So, for example, of shares in ABC Inc trading it $15 you could place a limit order at $14 so as soon as the shared dips below a certain price. That order will then be raised again, just like with the stuff. Plus, it will only trigger the bag. So the amount you pay may actually be slightly different to what you requested. Let me reiterate that last point again. Setting these prices does not guarantee that price on Lee that the cell or by order will be triggered when when it reaches that price. 11. 2.9 Tools and Sites: Okay. That's quite a lot of theory out the way your public keen to actually get started now. So the first thing we need to do is look at some of the basic tools might want in our journey on trading in stocks and shares the first site, the website tool that you will find very useful is website called a D v f n. Now this a dvf n is a riel allrounder website aimed specifically at share trading, and it gives you lots and lots of different kinds of information. If you can see along the top here we got quote. We've got charts, news, financials and so on and so forth. Now it's completely free to register. All we do is click on the free membership and filling our basic details, and that will give us everything that you probably want to get started. There are of additional things that you can purchase. Self isn't we've got this level to which then cost money, but it gives you more information such as top listens so on will get into that more into the calls. Another useful website is Google Finance. It's just google dot co dot UK slash finance or google dot com dot slash finance really depend on what country orbit, and it's again a great tool to give you some based sick at news on charts. You could do it to actually search for particular shares. Andi. When you find them, it will bring you up charts and information. Basic information about the competent. Again, we'll go through that shortly through a particular stuck that you've searched on. It's quite handed because under stopped charts that gives you these links here, which might be to particular new stories. So if you look here the most recent story, we can click on that, and it takes us to a particular new story about that stock in question. And so if you are interested in examining the start, that a great way to find some quick information. Another tool that were used quite lot is share. Cast up come again similar kind of thing. It gives you lots of these. What's called charts, Top charts and things top lists again. We'll go through all these shortly, but again we get a news feed here, and it's all very good for seeing what companies are in the news and again we'll see short . They're very good for getting ideas in what you might want to invest in. Last but not least, you're going to need to broker. As discussed in an earlier lecture, the brokers are the people who will execute trades on your behalf before the time of the Internet. To use a broker, you would actually have to phone a broker up, tell them you want to buy so many shares or so much shares in a certain company, and they would execute that order for you. These days, of course, everything is done online. There are lots and lots of brokers out there. I myself used a computer. Kal Hargreaves Lansdown, based in the UK As I myself, I'm based in the UK most brokers working pretty much the same way, and I'll show you through how you would place a sample trade. Let's let's say we wanted to buy shares in Apple. The first thing would want to do is search for the company, so let's type in Apple and we go on. This brings up information about the Apple Company. Now, if we decide we want to trade in Apple, there will be a button somewhere that says deal or by So we just clicked. Deal. Now then we say whether the we want to buy or sell shares and you can see I'm currently holding since two shares on. But I want to buy some more. I would simply click the buy button within, say, either how many shares or how much we want to buy. So, for example, I could say 1000. And if I said number of shares, it will allow me to buy 1000 shares or we could say pounds sterling, in which case it will buy me £1000 worth of shares. I then need to re enter my password and then I would simply click place a deal. Every broker may work in a slightly different way, but they all used the same premises. We will want to sell or buy shares. We will enter a quantity we will define with that quantity is in a currency amount or a number of shares, and then we would probably after into some sort of password and then we would place a deal . Typically want to place the deal button. You will be prompted for a confirmation screen and you will be given around 10 seconds to confirm the trade in order to get to take the price indicated. 12. 3.1 How to Find Shares: okay. Now, ever the real nitty gritty stage. You don't searching on the Internet and you found a handful of stocks that you like The look off. You've read a news article that says the stock's gonna skyrocket. You've seen some tips that say similar. Maybe you've read some articles wherever companies just got a big win. Do you just jump in and buy them? Of course not. These were just finding out where to start. After all, there's no real reason investigating company that's on the down and out. So once you found stocks, you need to do that further. Bit of investigation to find out if they really are worth buying. But you say to yourself, I'm no financial ways. So now what? Simple. Or rather, keep it simple. And this is one of the big tricks. People often get too involved in the clever financials and the bitters and lots of complicated terms that get banded around in the financial sector on ultimately, none of it really matters. There's a popular TV programme in many countries called Dragon's den, and in this program, entrepreneurs approach investors, asking them for some of their hard earned cash, and these investors always ask the same simple questions. What is it that you do? What does your company make? What service does it provide? How much is your company worth? How much profit do you make? Don't forget. The worth of the company is not always the same is the amount of profit it makes. How much debt do you have? There's not much pointing, making lots and lots of profit. If your debt severely outweighs the amount of profit, your making are you growing. And this is a very key question You need to find out by answering these five simple questions. You get to know whether a company's really worth buying into, because just like on Dragon's den, when you're buying stocks, you become the investor in the company. So you need to know that this stock is going to make you money. We're going to start going through each of these in turn on. Once we've been through the mall will know whether a stock is worth buying or writing off and trying the next one 13. 3.2 Using the Internet for Research: So one of the most obvious places to look for ideas is, of course, on the Internet bought whereabouts on the Internet. One of the first places I look is our Google finance website, So Googled according to U K or Don't Con Ford slash Finance. And this will usually give me a bit of a market summary of the Barry's markets that you rent within the UK You may be interested in the footsie 100 to 50 or share, and so on. Everything the U. S. You might want to look at NASDAQ and so on and so forth. You notice that we've got these top stories here. These top stories are just a great idea with what companies are currently in the news at the moment. And if you set up some of your portfolio within the Google website, you can. It will show you the new stories that are relates to your portfolio. But if you've not got only simply click the market tab and it shows you or the latest new stories so you can see we've got some new stories here from Telegraph that will show various news, and if we go into them, it might give us some idea if some company that maybe is doing quite well, just an idea of something that we might want to research further into another similar side to share. Cussed dot com again quite similar. We can go to the new stories here and again. We can get the current new stories, what's happening in the world. And again, we might just want to look something that catches our around. And finally, we have various investment for worms, for example, the fool dot com website. And these have lots of different announcements and lots of different forms that you can go into to get some ideas for where you might want to invest. 14. 3.3 Share Top Lists: under the great place to get some ideas for something for a stop to investigate is something called the top Lists. Now there's a couple site I like to go through, but my top list of versus Google. And if we just go to the bottom of our top stories page, you'll see this trends bit down at the bottom. So a typical example one is you might want to look at is this price one. And this shows the top gainers and losers of companies by the percentage brass change, which concede today. We've got a company here called G W Pharmaceuticals on the price has jumped 140%. So something is obviously happening with that company. And if we click on the company to get more information, we can see here. That trash real house skyrocketed today and said, I, that doesn't mean that we've necessarily missed the boat, but it does mean that something really grates happening with this company, and we should maybe start investigating that further again using the Google website here. We can see what's happened here to cause this jumps of Look at these he and cute. Something's obviously happened here. So if we scroll down and look at these so we can say here GW Pharmaceuticals say's draft nets in jobs to the meat gold. Now that's obviously quite a good sign. So a company, a drug company, has just released a press article saying some drug that they have been doing a study in has met the gold. Now this obviously means they're going to make some great profits from that. So again, just because it's done, this jumps immune with Mr Boat. It just means lots of people have jumped on the bandwagon because they know this company is now going places. Similarly, the market losers something to watch, because if you've got any investments in one of these, you might want to investigate why the share prices suddenly dropped and investigated further. Small investment drops like these Dartmouth too much. But if you've got shares in City of London Investment Trust, for example, that's just dropped 26% in a day, so you might want to have a look at what's going on there. Another website I like to look at again is the A D V FN website. Need to be able to be registered to actually access the topless in this. Once you registered and logged in, which is free. We go to this top list tab up here and here we get to see lots of decent lots of free topless here. So again we could look up scented gainers and leaders volume leaders again have never useful. One is the director shareholdings. If we click on that, we can see what direct dealings actually taking place now these very 100. Because if you have directors buying shares in their wrong company, it might mean they know something that you don't. And so again it could be worth investigating. Similar if suddenly all the direct and in particular company start dumping their shares on the market. While that might be a pretty bad sound, that something bouts happening again topless are just another great way to look for companies that you might want to then investigate further 15. 3.4 Broker Tips: another site I use a lot is share cast dot com, and I used these specifically for the broken tips. The broker tips are where various stockbrokers themselves start to issue what they feel is good stocks. Did you show the consensus of the market off roll on? So they're a good place to look just to see again what the actual professional trench themselves are looking at. While we're on this page, we also get the press tips now again, pressed tips. Take these with a pinch of salt. You have to. Sometimes that's why they sharing these tips. But again there could just give you an insight into various industries where something interesting might be happening. So again, it's always worth having a look and investigating further anything that you might find. 16. 4.1 Analysing Stocks - Introduction: okay. Now, ever the real nitty gritty stage. You don't searching on the Internet and you found a handful of stocks that you like The look off. You've read a news article that says the stock's gonna skyrocket. You've seen some tips that say similar. Maybe you've read some articles wherever companies just got a big win. Do you just jump in and buy them? Of course not. These were just finding out where to start. After all, there's no real reason investigating company that's on the down and out. So once you found stocks, you need to do that further. Bit of investigation to find out if they really are worth buying. But you say to yourself, I'm no financial ways. So now what? Simple. Or rather, keep it simple. And this is one of the big tricks. People often get too involved in the clever financials and the bitters and lots of complicated terms that get banded around in the financial sector on ultimately, none of it really matters. There's a popular TV programme in many countries called Dragon's den, and in this program, entrepreneurs approach investors, asking them for some of their hard earned cash, and these investors always ask the same simple questions. What is it that you do? What does your company make? What service does it provide? How much is your company worth? How much profit do you make? Don't forget. The worth of the company is not always the same is the amount of profit it makes. How much debt do you have? There's not much pointing, making lots and lots of profit. If your debt severely outweighs the amount of profit, your making are you growing. And this is a very key question You need to find out by answering these five simple questions. You get to know whether a company's really worth buying into, because just like on Dragon's den, when you're buying stocks, you become the investor in the company. So you need to know that this stock is going to make you money. We're going to start going through each of these in turn on. Once we've been through the mall will know whether a stock is worth buying or writing off and trying the next one 17. 4.2 Comparison Chart: when we're analyzing stocks because with a few different questions you want to answer and truck. It's handed to have a spreadsheet to actually list them all down in, and also keep track of the various companies that you're looking at until I've created a basic comparison spreadsheet that you can use and fill in as you go along. This is available in the bonus sections. At the end of the course, there's, ah, a couple of lectures that just there for downloading various useful tools, and this is one of the tools you'll find there. It's called the comparison chart. It's based on Excel. You'll also be able to open it in Google spreadsheets on I'm editing It Here with Excel Online, which is completely free if you've got a max after count or even open office toe all and so on should be ableto open it. It's just a standard Excel four months, and basically what we have here is a very simple spreadsheet where we can put in the company's way wanting to track. So, for example, let's say we won't start tracking Apple, and as we go through looking at the various bits and bats, we can fill in the spreadsheet as we go along. On some of them, the columns are expecting numbers. Some, uh, jump down boxes where we said yes. Oh, no. On depending on the various options that we choose, the color will change to red, green or amber. Now amber is obviously middle of the rolled green is a big thumbs up on. Whenever we get a red, it means well, maybe know what we're after. So as we go through the examples, Aziz we go through analyzing stocks will be using this spreadsheet and filling it in, and at the end, hopefully will build count of the number of greens, reds and yellows on. That will give us a much better idea of whether the stocks worth investing in. 18. 4.3 News: the first question we're going to answer it. Are you growing on the East? Wait. Once. This is to basically do a search on a company on See what news articles are coming up against about it. Because if a company's growing, maybe he's got some major win or things are going in the right direction. Chances are there's going to be some news about it. So the first to lose this is Google Finance. And let's home investigating a stock apple. Well, the first thing I'll do is I'll do a search for Apple when we get to stuck here. So we've got a PL, which is D stop too cold uplink, and you also see that it's on the NASDAQ Stock Exchange. So down the sound here we get all these new stories. Now, as mentioned in an earlier article, Google is very great at showing you the price chart on you Get to see the news articles that relate to certain time maybe wanna stop jumped. But for now, fistful life start. Look through the most recent news articles. Seat it. Any headline that looks interesting. These are often very good ones. Look at where analysts ratings got something about them. So if we go and have a look at that and we can have a brief look through the news articles to see what they say now, you don't need to understand too much about it. But you're looking for key terms, for example, what's happening here. So it's saying, using the Zach scale or wanting to get strong by fire when it indicates a strong sell based on 27 ratings used, Apple has an average broke a rating of 1.61 which, as the article has already told us one, indicates a strong buy. Therefore, based on 27 different ratings from different brokerages, it's got a fairly strong buy rating. Let's have a look at some of the news articles. Apple still green despite to read market so I could see Apple shares trading a $2 higher in Tuesday's session. Streets cheering mornings, Morgan Stanley's projection. The iPhone demand is tracking ahead of schedule again, so all this looks like a very promising good news and the kind of thing that me might want to see and again Isra truck through. Let's have a look at this one here where the stocks seem to jump quite a bit. It was, Oh, trading outlook here. So here we've got the summary. Apple is currently nine point Thompson blow its 200 period moving average and is on a note . Would trend volatility is relatively normal, as compared to the average volatility over the last 10 periods? So, again, that's best same. The prices right about now send the Loy's average price, and it's moving upwards. So again, that's a great article that's basically taking all the right boxes to say that Apple seems to be moving in the right direction. So that's a tick in the box. It would look like the companies companies growing based on the news articles we've found. No, obviously, I've gone through that very quick, like when you're looking that stuck and finding through it. I would suggest spending around about half an hour just to really make sure that there's nothing on towards in any of these articles and try and get a bit of a feel for the company , what it's doing and maybe why it's growing 19. 4.4 Epic Charts: we found our stock. The news looks good. Let's start doing some more digging. The next thing we're going to want start investigating is what's called the epic. This is the chart that sort of familiar to people are quite commonplace when people start looking at stocks and things. If you can see in Google Finance, we've actually got a bit of it epic chart here, but it's not particularly good. I like to use a dvf n dot com because it provides much more information in the charts. So Jews that head over to the Ready Fi FN website make sure you're locked in on on the front page. You'll see this quick court simply start searching for the stock that we want. So in this case, apple, it brings up. So I'm very basic information. However, this chart really is and gives it enough that we want to. What we do now is click on quote at the top here, and this gives is much more detail. So the this chart provides is with a lot of financial information, not everything but a lot to get us started. So at the top here we've got the company name we've got the symbol. So it's NASDAQ, which means it's under NASDAQ Stock Exchange. On symbol is a P L. Again. We can see the market is NASDAQ type of stark on lots. Further information such as that and over the next few lectures will start looking at each of beating. Turn on seeing what it actually means to WAAS For now, let's just have a look at this two p e ratio. This is the price to earnings ratio. That basically means that it's the share price divided by the earnings per share Ought. To put it another way, it is the number of years it would take for a company to earn the price of its share. So, for example, if the share was priced was 10 pence and the earnings per share waas two pence, the P A ratio would be 10 divided by two equals five, so it would take five years to earn its share price. If the share price stayed at two pence. Well, let's have a look at Apple. The P ratio is 10.9. That basically means it take 10.9 years to earn the Coon Shack price off $104. Now you might be thinking 10.9 years. That's a long time to maybe the stock's not worth anything. Well, actually, no. That's wrong. Because the share price is based on what investors bid. Ah, high P e ratio actually means there's lots of confidence in the company. In other words, it means investors think the company's doing so well. That's it's easily going to grow. Therefore, that ratio will eventually come down over time. Conversely, if it was a low P racial, maybe two or three, it would mean that in other investors aren't as confident in the price isn't going to go up through demand. Therefore, because we're more bothered about the future share price it now it doesn't look as attractive. Remember, we're not buying the shares to get paid back in a few years. We want companies who share price is going to grow. Personally, I am for peace anywhere between 10 to 14 although I do sometimes break this rule partly because different sectors have different P. Blanding's because of this is an interesting one toe look out. But it's not something I use a great deal to make hard decisions about whether to invest in a company 20. 4.5 Share Price: Now let's look at a fairly important part off the epic chart. And that is, of course, how much you're actually going to be paying for the share. Now we can see here, we've got this current. We've got a bid and we've gotten off for the current is kind, like the average in between price. And what I mean by that is that the big price is 105.65 and the offer price is 105.69 Now, this basically means that if you were to sell your shares, you'd be selling them at 105.65 If you're going to be buying the shares you put buying the 105.69 now the first question might have is 105. What dollars sends whatever. Well, it really depends on which exchange you're looking at. So, for example, on NASDAQ, the shares have often listed in dollars. Where is if you look at the London Stock Exchange there often listed in pence, so it really depends on which exchange looking at now, when you're using your broker's website, they'll be more specific as to whether it's in dollars, pounds, pence or whatever the currency. Maybe, however, an important factor is this difference between a bit and the offer. Because you'd noticed that if you bought 100 shares of Apple right now will straight away, you've paid more than what the bid prices I what you comptel for, and that difference between the two is called the spread Now. This could be important because for certain shares that spread could be quite wide on. Generally speaking, if it's a widespread, then it tends to be more risky share or maybe share. That's not traded quite as often as a general rule of thumb. I like the difference between those the bid and the offer to be around 5%. So now we have some basic information. Let's start filling in our comparison chart. So far, we're looking at Apple. We know the offer price is $105. 69 on from the previous lecture to P ratio is 11 point full. It's now let's go and fill in these details so the companies apple. The current price is around. We'll see $100 just to make it a bit simpler. P ratio is will call 11 were just rounding up here. But the point is, we just started to fill this chart out, and if we start going through looking at all the other elements of the epic chart will fill them in, is we go? 21. 4.6 Market Share: One of the questions that we need to ask is how big companies on one ways we can enter. This is by looking at what's called the market cap or market capitalization, and we have that here. So in the case of Apple, we've got a market cap off 579,852 million. Okay, so that's a pretty big market cap Now. The market cap is basically the number of shares and issued multiplied by the share price. So although it's a good indication of how big the company is, it doesn't really relate anything to its profit. Always turn over. It's just about the number of shares available for purchase multiplied by the price you pay for them. General speaking companies come big Groot on the market share up to 50 million. It would be very small, Relatively speaking company. 50 to 150 million would be a small company, 150 to 500 made 1,000,000 is medium, and anything above 500 million is a pretty big company. So if you look at Apple 579 1000 million, I think it's fair to agree that Apple is a pretty big company. Whether you go for small or big companies really depends on what you're looking for. What do I mean by this? Well, smaller companies with smaller market cap in SE we have more room to grow because they're relatively small. Therefore, they have lots of growth that they can do, and therefore the price all the time will increase with bigger companies such as Apple. Because they're so big old redder, then the chances are price isn't going to increase that much. However, to do tend to be much safer. Companies are right. They're not going to double in value Over the next couple of years, however, they will give you steady growth. So if you're after a company that commend you big returns in a short to medium term, then you possibly want to go for competent with smile small a market cap. If you're wanting to protect your money but still get some growth, then you might want to look at these larger companies again. This all has to be used in conjunction with all the other analysis will be doing so again. Now, with half that information, let's just go back and update our chart to fill in the new information again. I'm just going to round up a bit. 22. 4.7 Profit: The next question I want answered is how much profit is the company making now? If we look at Apple, we can see the prophet is 5 53,394 1,000,000 starts, quite a chunk of profit on on the face fit. That sounds very good and make no mistakes. That is very good. But profit on its own is not the entire story. When it comes talking about the Prophet Onyx, I'll explain what I mean. First of all, let's go of trouble Comparison charts and add in dollars profits so it was will call it 54 1000. Because of this kind of level, it really does matter about a few $1000 although it just matter. I do 10,000 the wrong way. Okay, you'll notice that as we feel that in its automatically fill this this column in here profit versus cap. Now what this is is given the amount of profits that the company has been making. What is the ratio? How long would it take for the company to buy all its own shares back at the current price at the current market capacity? Well, in this case, making $1,054,000 a year. The perfect ratio is 10 or 10.89 In other words, it would take 10 years for its two by itself. Buck, now that's actually a very, very good figure is a rule of thumb. I tried. I want companies by. That number is 15 or below, so a rating of 10 means they're actually doing very, very well. And again, it's ticking yet into the box. For me. How are the another important aspect of profit? Is one that answered one of our questions. Which is, Is your company growing? And one way we can find out if a company's growing is back, comparing the current profit against previous years. After all, if profits are going up, that means the company's obviously growing. So let's see if you can find out that now what we need to do is go to the top of our menu, Andi Click Financials and now this brings up some further information about the company. But before we looked all that, which we will do in a minute, I want to go over here that says annual reports. So this now shows some historical data for our company. So what you got here? We want to scroll down here where we want the income statement on the figure where bothered about here is the total net income because that's the amount of money the companies made after taxes and depreciation. Everything else on the important thing is here is whether this figures increasing. So if we just go back to the top of the chart, will concede starts 2011 12 13 14 15. So, as we can see, this number here hopes this one here is starting to increase. We had a bit of a dip, but again overall, based on five years ago, we conceive that that figure has increased any steadily increasing so again that shows that the company off role is growing nicely. 23. 4.8 Dividend History: while we're on the sheet. We also want look at a few of the ways we can measure growth. So we've already looked at the amount of profit. Another important way. Become measure how well the company's going is by looking at its dividends payouts. So this is where to find it. On the screen is just do a search on the screen for Dividend. Andi, Hey, we want our dividends per share and again what? We want to see if this is increasing. Now, if we look at these, actually, they're not increasing too well. We look back In 2012 they paid dividends of around $2.65 per share. Then they dropped 11 falter, then 1 81 on 1 98 So although the actual company itself is going in a profit perspective, they're actually paying less and less dividends. Now that's not necessarily a showstopper, but it is something to maybe have a question mark over and maybe investigate a bit in tow. I One possible reason could be that they're investing or reinvesting in a lot of their profits into development. Andi, Sometimes that's fine, so don't get too hung up about it, but it's just something else to add on our spreadsheet before we do, though, there's one last thing I want to look at about growth and do that. I want to go back to the company data button. And quite simply, I just want look at the share past performance for the previous three years, now considered the moment. Just recently, we've had a bit of a dip of around 20%. On this time last year, we've got a dip of nearly 30%. What I'm bothered about is what it's being over the past three years. And as we can see, based on three years ago, our overall share price has increased. Now this is a good sign because the further you looked company's history. Generally speaking, if it's a well run company, the overall trend will be up. You will always see these dips, and you don't need to read about them too much unless something's going drastically wrong. But generally speaking, as long as I couldn't share, price is higher than now up. Three years ago, share price were on the right track. Let's going into these bits of information into our chart. So rising profits, yes, they are rising dividends. No, not so much rising share price, absolutely 24. 4.9 Yearly Statements: extremely useful source of information for any company are the quarterly in annual statements and Eddie Be fn devised. These with us. If we go and click the news button, we can see a whole list of various news atoms and they wanted. The atoms we want are the quarterly or yearly statement. So we want to search through these filings now, unfortunately, when it's a big company like Apple, we have a lot that we're looking for. Something like here we go. Quarterly report. Let's have a look at our quarterly report. So these are the financial statements that companies must give out. Lishi Lebert us. These companies do quarterly to give out information about their trading and how well they're doing. If we start looking through this, it will seem like quite a hefty big report on. There's lots of information in there, and you might be thinking, How on earth am I supposed to make any sense out of this? What's wherever? Well, fear not because Ed, if the offense gives a tool that makes reading these statements much easier, or at least gives you quick way to find out the information you want, what we need to do is click back on the news tub. Well, actually, go back to the previous page to our list off statements. Onda. We want this highlight phrases option. Now, As the name suggests, this allows us to set. Keywords are key phrases within our reports and the largest to know assign a color to them . What we want to do is a sign. Red colors, too, terms that might mean bad news. Green Two terms That might mean good news on a blue or yellow to other, in different news or in particular, use yellow offer things like cash. So what this allows us to do then is quickly get to the bits of information we need and the's just them. Examples of what I use Don't worry too much about memorizing what oldies are. I will put them all in a Pdf document that you can download in the bonus section at the end of the course. But there's an example. So in our red terms, I have difficult down by in predictable poor law, difficult trading, challenging, tough, lower expectations on deficit. Things that we want to see are the green statement exceeding expectations. Excellent profit up favorable and positive. The blue ones are to highlight items that I want to find in the statement are going to be important to me. So, for example, debt, we will come to this in a minute. But sometimes it's very difficult to actually get it. The amount of debt a company really has on. Obviously, that's important to wars, and more often than not, it's hidden away somewhere in 1/4 statement. Sweet highlight that in blue again with borrowings and covenants because thes just other ways they might mention the debt. It's once you're happy with your highlighted word. It's like, OK on, then go back to our news statement now, as long as you're logged in, it will have saved old loss of future time. So you don't need to do them every single time. Go in because we just lost where we are Now. Let's just go back and search for uncle again. So let's go back to the news under pretty sure it was on page nine. Time of creating this cost. So here we go quarterly report. It's now, as I quickly go through, we'll see certain words. Highlights of For example, cash is being highlighted in yellow, and I could just come through him. Go long term debt weaken. See Monckton than we have 1,053,000. That's just jacked us December 2015 which is the most recent we'll get. So total debt is 53,000 1,000,000. It's carry on scrolling down, see if we see any red, but we don't want his red. But we do want is lots of greens is very scanning through. If any certain words come up it sometimes 100 just to read them, they might give you a bit more information to why the company has debt. So far, we're not seeing any red, which is a good sign. Were not seen too many greens, but I don't need to worry about that too much at the moment. Again. Long term debt 53 I was again. These things are always in millions, and we can quickly scum through Okay, we've got a red here, So let's see what this is saying. That sales grew by 2% partially offset by a law I pregnant sales. Okay, so that's something to bear in mind there, struggling with iPad sales compared to what they're expecting again it on here. Net sales decreased during the first quarter 2016 Paxton Eliya due to lower net sales of the iPhone and so must fit again. We'll net sales of the iPhone central shifting is cos sales mixed your sports with lower growth margins. So secrecy was seen quite a few red items here, so that doesn't really bode very well, especially because we're not really seeing very many green items. So we best. We just finished running through the report that you can see we're seeing lots of red to you. Actually, the quarter statement is not painting particularly fantastic picture at the moment. What we can do now is go to a comparison chart. Other things I want in here is the that which was around 53 1000 million. Aunt. I'm going Service Annual statement. No, to all positive. I just want to copy the contents of this cell here because one of things I'm interesting with Dad most complete town death. What I'm most bothered about is what the debt traffic ratio is. Now, it's concedes. No 0.98 Now my real, with some that I follow, is that a company's debt should not really outweighs profit by more than three times if it does it match trouble to pay those those debts off at some point in the future. So to me, I just want that to be on three. There we go with filled in a lot more information here on our chart. It's now we can start to make more informed view as to whether we think this company's worth investing in or not. 25. 4.10 Final Research: So we've now learned quite a lot about Apple is a company now. This might give you enough information that you want and we'll review some of the items and what sort of thought processes I would normally go throughout this stage. But before we finally make a decision, I just want to go back to the site that I used to my brokers. The company's called Hargreaves Lansdown. As I say, I used them because they're UK based company and I'm based in the UK If you're based outside the UK, you're probably not going to want to use them to trade shares. However, they are still a very useful site for getting information on shares. I usually use them as our last moment to bit of research if I'm not too sure about to share . So, for example, let's go today share market unless go and find Apple. When we looked at this earlier, we saw that we could go on like the deal now button. But I'm not actually logged in at the moment. I quit because I want to show you that you don't need an account to get a lot of use out of this website as we so on Eddie the offending. We've got lots of information here. We've got the charts. Sometimes the charge would be easier to look through the science. We've got again some more fundamental data. Again, it's just another 100 quick way of finding information, and it's actually also a quicker way to get the dividend history. However, the reason why I want to come here is because Hargreaves Lansdown Osho has some useful tools, such as a director deals tub, which shows purchases and sales of director deals. They also have this hotel research tub, which for a lot of the main companies they actually do their own research and give their own comment. Now again, these are only comments by the company in their opinions. However, given that they are the experts, I sometimes use that opinion it times weighing one way or the other. I'm just going to look it another company. Now I'm going to pick a UK stop now, and the reason why I'm showing you a UK stock is because they showed this extra tub full motion case docks, which is this broker forecasts. Unfortunately, only do this for UK start. However, they are very useful because what there sure is a round up of all different brokerage firms on what they see is a forecast for a particular share. And to retake Barclays Bank, you can see that out of 13 different broker firms Oneness state, it is a strong sell. Wanna States cell three neutral and eight of the broker forms have issued a strong buy recommendation, and we get extra information here. So Charles, a target price that they think it's worth on, whether they upgraded or downgraded so again for UK stocks. It's just an extra bit of evidence you can add to your whole investigations into a particular company. If we look back at Apple that the research again, they've got a bit of a view on something that we saw ourselves in the quarterly statement, which is if we've reached the point of peak iPhone and this is a significant milestone in Apple's history again, this is just reinforcing something we've already read on already seen in various news articles. I always recommend having a good read through these because they tend to show a fairly plain English a nice synopsis about the company. Okay, we've finished our research into Apple now. So let's have a bit of a review about the information we have discovered. So we know the crew prices around about $204. We know that the market Cup is around 600 billion, so this is a big competent. In fact, they're one of the biggest in the world. We know their profits are around $54 billion on a profit to market cap ratio. That's around 10.9. Remember, this means it would take around 10 years of profit to purchase their all their own shares back at the coon promise. Generally, I try to keep that under 15 so it's well within the values that we want to look at next. We've discovered that there's around $53 billion worth of debt on the profit versus debt ratio, is just about to even which basically means that if they wanted, they could quite easily pay awful their debt with their co profits. Of course, it's always a little bit more complicated than that, but the important thing is they're not drowning in debt. On the ratio I tried to keep under is around three times If a company's got more than three times amount of debt to their profit, they might struggle paying it off if things go get a bit tough. Finally, we found it. Profits arising, the share prices rising at least over a three year period. However, the dividends have not been rising. So we've got a couple more ticks but a cross in the box there. And finally, in the various news articles on the Hargreaves Lansdown statement on their wrong quarterly statements, we're seeing a bit of a trend that showing the smartphone market reach maturity. This is basically funds were saying that people aren't buying them quite as often as they're used to. That many people already have. Smartphones are ready. Therefore, Accola struggling to make any more growth within the market. That doesn't necessarily mean that they're in trouble and they're going to start losing money. But it doesn't mean they might not be able to grow as fast as they used to. So Apple's being quite mixed back. We've got some very good positive indicators. However, we've also got some warnings. Based on this information, you can now have a much better idea of whether you think it's worth. Investing or not, the choice ultimately has got to be yours. It is all your money. After all, however myself, I would this moment in time considered $104 a little bit expensive. Now. I actually went through this exercise 12 months ago with Apple, and at the time their share price was around $70 I bought some shares in them at that point where 12 months on and I've made around $30 a share. So it was a good call. However, I'm not completely convinced that there's going to be much room for further growth. When I last bought the shares, it was just before the iPhone six was released. Um after the new iPhone was released, the shares went up in hit a peak of around $130. So although I wouldn't buy any shares now, I'm certainly not going to sell the holding I've currently got. I'm going to wait until the new generation phone comes out and see what happens. If we have a bit of a jump in share price again, I think it then might be a good time to so take our profit on, look on the next company. As I said, though, at the end of the day, it's got to be your cold. You know, you have to decide how much risk you want to. Ted. The only thing I would say about Apple is if you invested some money in Apple, I doubt you'd lose very much. It might be a bit of a struggle at the current price, however, you're certainly not going to lose all your money. 26. 5.1 Risk Reduction - Introduction: in this section. I want to talk about risk reduction. So far in the course, we've looked at the basics of investing, and I've talked through how you might want to investigate stocks once you found them. Originally, I wanted to have this rich risk reduction section early running the course, but I was concerned that most people would want to get into the nitty gritty. However, the risk production is an extremely important part. There's no doubt that investing in chairs is far riskier than other alternatives, such as cash. However, there are many things we can do to reduce that risk. Ultimately, it comes down to knowing what to look for, a bit of common sense and knowing when to get out. One of the biggest ways to reduce risk is quite simply to give your investment time, at least within the boundaries of common sense. What I mean by this is that if you buy some stock and expect to sell it in a few days to make a nice, tidy profit, then prepared to be prepared to be disappointed, this is a mistake I made in the earlier days. Don't get me wrong. It is possible to make money this way and quickly, but it's also a quick way to lose it if you get it wrong. Remember, shares a part of owning a company and companies, or at least those big enough to be on the stock exchange, rarely changed drastically from day to day. More often than not, companies have long term goals to grow from investment in building the customer base. This takes time. Now don't get me wrong. Sometimes companies do collapse, so it is always important to be careful which ones you pick, and hopefully with previous lectures will have given you a bit of add even what to look for to find a stable company. With all this in mind, a successful trade and needs to take the longer view. At a minimum, I'd say five years. And the longer you have to grow your wealth, the better the pension funds you normal looking at 25 years. Plus, this doesn't mean in a shares you bash. You should sit on them for 25 years. I just mean that you should give your investments a few years to mature. Try not to be too hasty and panic about short term movements in price. Sometimes it can become obvious that particular investment isn't going to work, and in these cases you are better getting out prematurely. And it's this knowing when not to panic on, when to get out. That often makes a difference to in success and a failure. But do remember not even the most famous festive current days. Warren Buffet gets it right all the time. The difference is he knows when stay put and give his investments. Time on went to criticism, losses underground. 27. 5.2 Remove All Emotion: In the previous lecture we mentioned, one of the key factors is knowing when to sell on, where not to sell. And in many ways this basically comes down to removing emotion from your dealings. I have a few friends. You watch the deal stocks. There's a full time job. What they do is a bit more complicated than just buying and selling shares in a company. But in essence, their success amounts to the same thing. They removed all emotion. This is also possibly one of the most important aspect soft trading. And if you can't do it, you really need to learn how to how to remove all emotion. While the first step is, don't panic. People get attached to money. They actually make an emotional attachment, especially if that money is going up or down. So the first part of removing emotion is simpler. Do not panic. This happens all the time, especially with novices, and I did it in my early days. Share you own, it started to go south. You're starting to lose and money and so that's all. The investor panics and sells the share of instantly, and then the share moves up and you've lost the morning when you could have kept it. You have to remember shares move up and down all the time. Thes air. Normal market fluctuations. That doesn't mean ignore sliding price. It just means before you hit sell button. Perform some quick research to try to understand why the company price is going down. So we need to find out a reason when share start to go down. Search the news feeds on the Internet for news on the competent. Maybe they have just released a trading statement, maybe a profit warning. Maybe that's being an earthquake where they had offices located. Either way, the first thing you need to do is found out why the share price might be sliding. A typical example is when a company releases that end of year report on. They might say that they've made $100 billion profit more from the not the shares will still go down. That doesn't make much sense, but this is the things that happens on the stock market. News comes out. Any news and practice might come down. It may be because people have decided now is a good time to sell after this statement. Or maybe it's because people a word that they haven't met the expectations they've been expecting. By all means. If the news is something bad thing, get out, sell up and move on now. Sometimes you might not be able to find any news at all. And this is something called This can be something cold tree shaking tree shake Israel Laws Institution made dump a large number of shares in a company. The idea is that if enough shares get dumped, a panic will and shoot. This drives the price down, and these two institution that started it all quickly snaps with shares again at rock bottom prices. Ethical? Nope. Illegal. Well, that's a bit of a tricky one. After all, how could you prove it? Another key point is knowing when to sell. Sometimes shares a company shares go south because the company is in trouble. And in these instances, as we voted said, you need to get out. However, it's also important to stay out. Don't get attached to those shares. If you've lost money, just sell the shares, get out and move on. Don't keep checking the shares to see what the price is doing this is known as jumping in and out if you out, stay out. Another common mistake novices make is when a share prices going up and down. As it starts to slide, they panic and sell their shares. Then it starts to come back up again. So they panic the opposite direction on. By backing to them, the share price dips again. They sell them, it goes up, they buy them and they keep repeating this because they don't understand what's going on. Just be sensible. If it's sliding and you're not happy about why sliding or you think it's bad news, get out and stay out. If there's no reason why the price has gone down, it could just be market fluctuations. So just sit it out and keep an eye on the news. So let me just reiterate the key 0.1 more time. You need to try to remove emotions when things move on. Just look at the wise objectively and make a considered decision 28. 5.3 Spread Yourself (Diversity): another key factor in reducing your risks. Art is to spread your investments. There's an old and age don't put all your eggs in one basket. This is so true for stock investment it is extremely important. Market sectors will fluctuate therefore, by spreading your investment not only among different companies but among sectors. It means you get to even out the bumps. If one investment forms Paula, hopefully the edited performing well to take up the slack. So what I'm trying to say here is if you've got £10,000 to invest, don't put it all in a be seeing spread it around at least 10 different of the investments. A few years ago, I invested in a company called Expanses. It was when I had started with £10,000 I put £1000 into that company. I made a lot of the mistakes that I've been talking about within my own course on the share price started to dip. I didn't research the company enough, and ultimately the company closed and I lost nearly all the money I had invested all £1000 . I think in the end I ended up getting about £200 back. However, because Ohlmeyer's of investments have done so well, actually that £800 loss didn't make any difference because I still made £20,000 across my of investments. As I say, spread yourself and it will help even out the bombs. 29. 5.4 Know what you Know: know what you know. Do you understand the market you're investing in? I don't mean in depth, but you at least need to have a basic grasp of what a sector or the company does otherwise . How do you know if there are opportunities ahead for the company? Or if in earthquake in Nepal, my time firstly affected, my poor food tends to be Failla technology biased. This is because I am a software developer until I keep a very close eye on what's happening in my market, every lots of technique used for the sheer enjoyment of it. So for this reason, I feel like I have a pretty good idea of where the wind is blowing at least morsel than I would for any of the companies such as Jimmy two shoes. Understand the company again, not necessarily in death, but at least have an idea of how the company makes money. I was recently advised to check out Disney. On the face of it, it looked like a great company, but as I investigated, I realized I didn't actually have a clue how the company makes money. They don't just make films, but they make TV shows as well, and clothes and toys and amusement parks on the whole of the range of things. For me, they were just far too complicated for me to understand. The numbers seem to say they were doing very, very well, and I'm sure there are very sound investment. But quite simply, I didn't understand enough about where their money comes from. To really have an idea of where it was going, I'd have been reliant too much on the people's opinions. 30. 5.5 Research, Research, Research!: the final risk production structure is actually quite simple. Research, always research company Never go off somebody else's say so. Never Gore purely off a tipster. By all means, use all these things is ways to get ideas for a company to investigate. But never take someone else's face recommendation. Always research the company yourself. This, as we've seen in the previous lectures, this could be quite easily. Don't we can check out quarter. In nearly statements, we concerts the Internet for company news or market sector news. We can try to understand how the company actually makes its money. The key point is, you have to research the company yourself. As we've seen in the Apple example. It doesn't have to take days and weeks. It can. You can spend half on hour to an hour investigating a company. It really depends on how strongly accompanies seemingly doing or not. But the key take waypoint is always research