The Stock Market for Beginners | Researching, Buying, and Selling | Rob Armbruster | Skillshare

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The Stock Market for Beginners | Researching, Buying, and Selling

teacher avatar Rob Armbruster, Investing and Personal Finance

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

12 Lessons (31m)
    • 1. Stocks Class Intro

      1:43
    • 2. The Art of Self Control

      1:46
    • 3. What is a Stock

      1:57
    • 4. Where Does the Money Go?

      1:36
    • 5. Amazon Stock Lesson

      3:01
    • 6. Home Depot Stock Lesson Part 1

      3:03
    • 7. Home Depot Stock Lesson Part 2

      2:11
    • 8. Tesla Stock Lesson Part 1

      3:07
    • 9. Tesla Stock Lesson Part 2

      2:10
    • 10. Finding the Best Information

      2:55
    • 11. When to Sell

      5:07
    • 12. Next Steps

      2:32
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About This Class

Stocks are my favorite type of investment. I've been fascinated with the stock market since I was a teenager, and now I'd like to pass on what I have learned to you! This class will empower you to do your own research and buy great stocks for the rest of your life. In this class I'll cover:

  • What is a Stock
  • The Art of Self-Control
  • Where Does the Money Go
  • Amazon Stock Price Review
  • Home Depot Business Strategy
  • Tesla Stock Research
  • Where to Find the Best Information
  • When to Sell

Recommended Resources:

This lesson is not considered licensed financial advice. It is purely for educational purposes to help you to manage your own investments. Future trades that you make are done at your discretion. Music provided by bensound.com.

Meet Your Teacher

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Rob Armbruster

Investing and Personal Finance

Teacher

When I was 24 years old I was sitting in an office with a financial advisor. After he showed me the fees associated with him investing my money, I left the meeting feeling uncomfortable with his proposition. This is how my investing journey started. I began to research how to successfully manage my own investments and found that it was easier than I thought. Today, I'd like to pass on what I have learned over the past seven years of managing my finances to you. 

I have a passion to help people from every race, ethnicity, and background discover their ability to make great wealth! My classes provide the basic fundamentals of making great long-term financial decisions. Please follow this page so that you won't miss any of the great resources coming out in the future!

... See full profile

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Transcripts

1. Stocks Class Intro: stocks are my favorite type of investment to make. I remember when I was in eighth grade. I just had this fascination about that and actually wrote my eighth grade report on the 1929 stock market crash. In this class, I'm gonna teach you how to buy good stocks when to sell them and how to enjoy the process. I'll show you the joy of anticipating the return, and then I'll talk about what is a stock? E. T s Mutual funds and options are all derived from stock prices. Will talk about where does the money go when you make the investment In a stop or more importantly, who doesn't go to then we'll look at what affects the stock price. I'll do three different examples of stock prices change and why they changed. Then I'll show you how to cut through all the noise and all the news and do your own research on stocks. And to end the lesson, I'm gonna talk about when to sell and when to get out and when to make new purchasing decisions. I'm so excited for you to take this class, and I'm so confident you're gonna come away knowing which stocks to buy and knowing how to make that decision. But also you're gonna come away understanding the joy that we get in investing. 2. The Art of Self Control: let's talk about self control in order to be successful at investing. It does take some measure of self control. Basically, what you're doing is you're delaying your gratification instead of choosing to reward yourself today with the money that you have your choosing to delay that gratification to a later time for an even greater reward. An example of this would be I could go out today and buy a taco for $6. I would eat that taco, and I'd enjoy it today. But if instead of doing that, I chose to go out and buy a stock for $6 I wouldn't get any reward today. But 10 years from now say that stock is worth $100 then is when I get my reward. That's the power of the late gratification. All investors show self discipline in some capacity. That is just something to lean into and something to learn as you learn how to in best. But investing isn't fun. If it's all about the return, what does it look like to enter into that joyful anticipation of what it could? That's really what makes it fun. That joy starts today when I start joyfully anticipating what could be the return. That's what I would encourage you to do and have fun dreaming and anticipating a return today and practicing self control, you'll be a better person for. 3. What is a Stock: I'm so excited to teach you about stocks to when you find out why and how stock prices move . It unlocks knowledge about Aton of other investments that you can use. E. T. ETFs. Mutual funds and options are all investments that derived their prices from different stock prices. And so when you understand how stock prices move, it's kind of like the key that unlocks the knowledge of how to invest in E T EFS options and mutual funds. So stocks became popular in America in 1919 and the 19 twenties. After World War, we were in an incredible economic boom and it became really popular. Teoh use your income to invest in the stock market, and it also became really popular toe borrow money from the bank in order to invest in the stock market. And that's where people got in big trouble because they borrowed a bunch of money that they had no capacity to pay back. And then when the stocks started going down, people started selling their stocks. And so that's what created the 1929 stock market crash is the banks failed because they had lent that money to the borrowers to use for the stock market, So that doesn't happen today. There are still are things that happen, but we're in a much better position than we were back then. A stock is a type of investment that represents in ownership share in a company. When you use your money to buy the stock, you're the one who becomes a partial owner of that. 4. Where Does the Money Go?: Let's talk about where the money goes when you choose to purchase a stock, I should say, Where does the money go or who does the money go to When you buy a stock, that money goes directly to the company. You buy the stock it and then they use that money to grow their business to bring a greater return. Were you in future? It's kind of fun to think about the people and the families that are working for this company being supported by new. And you're saying I believe in you and I trust in you to bring a greater return to this investment and to use this wisely. That's what I would encourage you to do. Think about buying this stock as giving the money to the leaders of the company. Think about it as if you're trusting them with that money to bring a greater return. The weight of that is a good thing to think about because it is trust that you enter into when you choose to give them. What you're doing is you're trusting them to invest that money well and bring increased to it. When you look at investing, that's one of the things that you look at is the leadership of the company. Who are they? What are they like? And do I trust them to manage this well and bring it increase to the money that I'm giving ? 5. Amazon Stock Lesson: Now I'm gonna show you the stock price of amazon dot com, and this is a great example of looking at what effects the increase in a stock price. Here is the price of Amazon. I've navigated to the part of the graph that shows me the five year history of the stock price, and I want to draw your attention to February 20th 2017 to the price it was here, which is 845 to the difference in price at the end of about a year and 1/2 August 27 2018 which is $2000. During this time period, Amazon went on a huge run of their stock price. It just seemed to increase an increase in increase. And you might ask, Why did this happen? That's what I'm gonna show you. In 2017 Amazon's net income was $3 billion which is a lot of money. But in 2018 their net income jumped to $10 billion. That is a huge jump for any company tohave during that time. Why did this happen? It was mainly because of Amazon Web services, along with Amazon's great prime deals where you get your product in two days and it arrives at your door and it's beautiful. They also offer companies services that serve them in terms of cloud computing and AP eyes to different companies and governments, which basically means they're providing services for companies to store and access their digital information. And that has been one of the biggest profit drivers of Amazon during the past five years. But that was especially adding to their net income during this time. I hope that gives you a better idea of what affected their net income and what caused this run during February 20th 2017 to July 2000 18. Which leads me to my point for this is look at the products that companies air coming out with. If a new product it has come out for a company that is doing well or that you think will do well than in best in that company and then the other lesson that I would want you to take from this is look how much net income affects the stock price. And so if a company's has solid net income, the price usually increases. If they don't have very good income, the price usually decreases 6. Home Depot Stock Lesson Part 1: Let's take a look at Home Depot as a company and see if it would be a good stock to buy. If you look down at this graph, here is the Home Depot stock price. And if you look in the upper right hand corner, I haven't at five years, and I want to look at what the stock price has done in the past year so you can see that it doesn't really move around that much. It's hanging around at around $230 for the past year. You can see the stock price plummet March of 2020 and that was because of the cove in 19 virus. And there was so much fun surety. And when there's unsure ity, there's fear. And when there's fear, people generally sell and want to get out of the stock market. The share price in March plummeted from a price of 2 45 to 1 52 However, in the past month it's recovered all the way back to a share price of 2 31 I want to research this stock to see what's gonna happen in the future and to see what their business strategy is going forward so I can just click over to their annual reports. Every publicly traded company has to post an annual report every year, and they write a letter to the shareholders, which is me and you, the people who own the stock. They also outlined their business strategy for the upcoming years in their annual report. This is an incredible resource that we can just access just by Googling Home Depot annual report. You can see it talks about our business in our strategy, and I want to draw your attention. Teoh A couple sentences in to this paragraph here. As a result, in late 2017 we launched our transformational journey to create the one Home Depot experience our vision of an interconnected, frictionless shopping experience that enables our customers to seamlessly blend digital and physical worlds. We are now two years into our multi year, approximately 11 billion accelerated investment programme to create this experience. So what that saying is Home Depot behind the scenes is investing billions of dollars to create a seamless experience for the customer to be able to order and receive their products from them. 7. Home Depot Stock Lesson Part 2: they're making it so that you can go online and easily find the products that you need and they'll be ready for you for pick up at a pickup station in Home Depot. The number one problem with these big stores is people feel intimidated walking into them, and they feel like they can't find their products. Some men might feel not enough. I don't want to go there because I don't want to get lost and then find out that I don't have what it takes. But if they can create a system to make it easy toe, locate the product with the person that needs that thing in the store, it's going to prove to be an incredible business endeavor for them. This is why doing research like this makes me want to invest in this company. I know their strategy and they're investing in a strategy to help customers find products, and I honestly believe that that's gonna work. We'll look back at this Home Depot chart here. For some reason, it just turned black, which is interesting. That's just my investment at working there. This is an amazing opportunity to have a stock that grows in the future. So that is how I would do research. Using the resource is that we've been given thinking of a company. Oh, I wonder what that companies like. I wonder what their strategy is and researching the strategy to see what their business is gonna be like in the future. If I go back here, I can look at information on the stock. So here's the price to earnings ratio. The market capitalization, the dividend yield. This stock yields 2.56% in dividends every year, and so that's a little bonus, along with the ability for it to increase in the future. I kind of like the idea of having a dividend yield to be able to have in my portfolio. 8. Tesla Stock Lesson Part 1: So now I'm gonna show you about one of the most fascinating stocks in the market right now . It's called Tesla Motors, and they produce electric cars. You might have heard of them before they took a concept of the electric car and made it into something that was luxurious and desirable to be environmentally conscious. And they've done it with a lot of style over the past years. That has led to a lot of volatility in the stock price. So here I'm looking at Tesla's five year history of their stock price, and you can see that it goes up and down and up, down and up. Then you get to 2019 and 2020 and something in this period happened with stock price. I was curious to see what happened and why. The stock price went from $219 on August 12 2018 to over $900 on february 17th 2019. So let's look at this. Why did this price increase a part of the reason Waas Because of short selling on the stock , people bought the stock to take a short position on it. They actually were increasing the demand for the stock, Sergei Clinic, off of Forbes, said on February 3rd, 2020 More short sellers than any other U S stock are buying Tesla's and 18% of its publicly available shares are sold short. So what happened? Waas. The price of the stock increased because people were buying the stock, thinking that it would go down. I don't really know why this WAAS, but it could be because of the volatility of the stock. And it could be because of the new Model three that had come out and the production problems that Tesla was having with that. And if we look at ARC invests, Sam Chorus said. As an analyst on January 31st 2020 he put a projection of the stock value being $7000 per share. Right now, the highest it's been is $900. That is a really, really big thing to be able to say that this stock price that is $800 right now is gonna be $7000 in the future. And I actually looked up that analysts agency, and they specialize in innovative companies, and Tesla's is one of the most innovative companies out there that can also be a downfall. You can fall in love with your with your own company, but it might not be the right thing to invest in. 9. Tesla Stock Lesson Part 2: Tesla's net income over the past three years has been negative, although in 2020 they might get to a positive net income. In 2017 their net income was negative. $2 billion. It got less. We hear after that, with negative $1 billion in 2019. It's even a little bit less $750 million of net income loss. And a lot of times that is the determinant of whether or not a company is healthy. But with Tesla's, it's kind of an interesting situation because Tesla's is so innovative. I don't know if you've been in one of their cars. It's the coolest car you've ever seen. It's like getting into a car from the future. It's hard to say where the stock prices are going to go with this. One of my advice is for you on this would be looking how much a stock price changes and take that into account when you're buying the stock because likely there's something going on and likely it is going to fluctuate a lot up and down of just being aware of that is a good thing. To be aware of the other thing I want to say to is that net income isn't always the sole determinant of where a company is heading. There can be a successful company that isn't profitable at the time, but they will be profitable in the future. And so, with Tesla's very well could be that they're making an upfront investment in research and development in creating the different factories to manufacture the cars in the next coming years is when we see that investment panning out so it could go either way. What I want you to be equipped with is the tools to research and be aware of all these different things happening before you choose to purchase this stock and before you choose to get it on. 10. Finding the Best Information: it is so important, Teoh. Cut through all the noise and everybody's different opinions and do your own research when you're looking at different stocks, my desire for this class is for you to come away with the tools to be able to do your own research. I don't want to just tell you which stocks to choose, which are bad, which are good. It's always evolving. Good companies are might become bad companies later on, and bad companies might become good cos it's dependent on who can keep up on the research and who can see the opportunities going forward. You have access to all company's annual report. It's for the past 10 years, and you can simply google them and pull them up. And in that report, they're going to share with you their strategy, their letter to shareholders. They're gonna also share their net income and their numbers that they submit to the government to pay taxes. It's all out in the open for you to be able to see in research one thing that I would research for companies. I would look at their total sales compared to their profit and what percentage of their prophet ends up being sales. I would also look at a company's strategic plan. The other thing that's so important, what is the culture of the company? What's it like for people to work there? What is it like for them to make the products? It's an opportunity for you to invest in places that shares values with you so that those values actually get passed on into the world. Researching and investing in companies that have your values is a good idea and something that also makes it fun and gives meaning toe what you put your time towards and what you put your money towards, Warren Buffett said. This you can't make a good deal with the bad person. This should be part of what we think about when we buy stocks. Are the people who work in the company good people. That's obviously a more complicated and complex question to answer, but there's a really good way to get a feel for that. Just by doing this research, you often times get a feel for what's going on in the company and what leadership of the company is like and how they've made different decisions. I'm not saying that you have to invest with people who are on Lee Perfect. But what I am saying is that integrity and them being good people does also matter when you're looking to make investments. 11. When to Sell: doing now? I'm gonna show you how to think about selling stocks, if you can believe it. Stocks don't go up all the time. Most of the times they do increase. But sometimes there can be circumstances that happen. Or there could be unhealthy things happening in a company that leads to the stock price decreasing. So I want you to be equipped and know how to recognize thes situations and when to sell a stock. So let's look at this example of United Airlines. I'm looking at the price of a share of stock and what's happened with the price for the past three months, so you can see February 20th. The price of the stock was $80. You can see the radical dissent of the stock price going throughout the past few months to here in the beginning of May. The stock price is now $22. What should we do with something like this that keeps going down? Keeps going down. The reason that this stock prices going down is because of the cove in 19 virus that's happening right now. The demand for people wanting to take flights is much less. What is it gonna take for people to start flying again and being comfortable flying to the degree that we were flying before Cove in 19 happened. And that's an important thing to take into account. Let's talk about when should you drop a stock, and when should you consider selling? Warren Buffett says this, he says, Should you find yourself in a chronically leaking boat, Energy devoted to changing vessels is likely more productive than energy devoted to patching leaks. In short, he's saying, You know what? There's sometimes where you just can't try to fix everything, but you have to just let it go, sell and find a new vessel. In essence, he saying a new stock to purchase might be asking yourself this question. Well, Rob, what's the difference between a stock that is just temporarily fluctuating downwards and it's gonna go upwards later and a stock where something unhealthy is going on? Or a stock where the demand is gone and I should get rid of it? I'm not gonna be able to give you a full answer to that question. What I will say is find out why the price is decreasing. Sometimes a price will decrease because a company has a negative quarter, and what that means is the previous three months weren't as profitable as people were predicting. That's actually not that much of an issue, and that's actually something that happens a lot. Even with good Cos they can have a non profitable quarter. However, if they've had a non profitable year or two years, you can start to ask that question and start to be like maybe this boat sinking. I don't like the way in the direction that this boat is going. There's also just things that happen that are outside of everybody's control, kind of like Cove in 19 and these these different things happening and there's things that you just can't control. But if it's significantly affecting the demand for the stock, then you might want to consider selling. The other thing that's good to do is make goals for when you want to buy and when you want to sell. If it hits this price, say if it hits $50 per share, then I'll sell, or if it goes down to this price, say if it hits $20 per share, then I'll sell because it's a serious enough issue that it's gone to $20 per share. Also, when you buy is when you should make the decision of how long you want to hold the stock and really what your goal is for that stock When you buy a stock, it could be your goal. Could be to hold it for 10 years or 20 years or your lifetime. You're not evaluating it day by day. Here's what I don't want you to do. I don't want you to go to your computer every day and look at it and be like, Oh, stock went down 1%. Go to your computer the other day and be like, oh, stock went up 3%. Should I sell? Don't do that. Have a more long term vision in long term goals for where you want to go with stock and whether or not you want to sell it 12. Next Steps: All right. So here is what you should do with what you've learned in this class. I'm gonna assign you a homework assignment, and I want you to find three stocks and find what the net income for those three stocks has been for the past three years. Has it been positive? Negative. And lists that out. Also research the company's strategy for what they're going to do going forward and write a paragraph summary of their overall strategy. And then you can use this report in this information however you would want. I want you to get used to doing this research. The other thing that I'd like you to take away from this is some of the resource is that I use. I use the platform of Robin Hood for my stocks There. A free trading platform. You can sign up for them if you would like Teoh, open up an account. It's not a requirement for the class, but it still is available for you. A great tool for being able to research stocks is Yahoo Finance. So I have the links for Robin Hood in Yahoo Finance linked on the bottom. If you would like to access those. The third thing I'd like you to do is refresh yourself on this course if needed later as you're starting to trade And as you're starting to get into things, if you need to come back and refresh yourself, I would encourage you to do that because there's so much that we covered in this lesson. And the last thing that I I would like you to do is leave a review for this class. Tell me what you thought of it, what you thought was helpful. Even if there are any things that you think that I could improve on with the class or add in the future, I would love to be able to know that. So please leave a review, even leave questions or comments. I'm so proud of you for finishing this class. And I'm so confident that what you've learned in this is gonna take you to the next level with investing, and it's gonna give you the tools toe, understand stocks and move forward for years to come. Thanks