Stock Market for Dummies

1. Stock Market For Dummies (Me and You!)

3. Why its important to me?(assets and earnings)

4. Debt v/s Equity – Difference between Debt and Equity financing

5. IPO – Initial Public Offer

6. Risk – Risk of being an owner - Dividends

7. Common v/s Preferred Stocks – Preferred Stock between Bond and Common

8. Different classes of Stock – Class A and Class B – Voting rights – Steve Jobs – Mark Zuckerberg – Laxmi Mittal `

9. Authorities

10. How stocks trade

12. Buyers and sellers meet

13. Primary and Secondary Market

14. Primary Market – IPO

15. Secondary Market – No control of company what so ever

16. Bombay Stock Exchange and National Stock Exchange

17. Over the counter exchange – Trading floor and Virtual Trading

18. SENSEX

20. Started 1 January 1986

21. Consists of 30 company across different sectors

22. Nerve of the economy

23. The index is calculated based on a free float capitalization method—a variation of the market capitalization method.

24. The base value of the SENSEX is taken as 100 on April 1, 1979, and its base year as 1978-79.

25. share price times the number of shares outstanding

26. Index divisor – magic number

28. The base period for the S&P CNX Nifty index is November 3, 1995

29. The base value of the index has been set at 1000, and a base capital of Rs 2.06 trillion

30. Nifty Index was developed by Ajay Shah and Susan Thomas.

31. Total return on Sensex and Nifty is around 20%

33. A bank or company which holds funds or securities deposited by others, and where exchanges of these securities take place.

34. NSDL – National Security Depository Limited

35. CDSL – Central Depository Services Limited

36. Depository Participant – Intermediaries between depository and investors

37. SEBI – Security and Exchange Board of India – Regulator of securities market in India

38. What all needed? Trading account, demat account and of course MONEY!

39. Rules of making money!

41. Rule No 2 : Never forget rule no 1

43. Market trends and rumors

44. Global market indicators

45. Govt policies and regulations

46. Company or sector wide factors

48. Groups – A, B and Z

49. Circuit – Control mechanism

50. Kinds of trade – Intra day and Delivery

51. Short selling and Short covering

52. The Bear The Bull and Farm

53. Picking up the right stock!

55. Includes going through the balance sheet of the company and P/L statement and checking various ratios

56. EPS = Net Earnings / Outstanding Shares

57. Trailing, Current and Forward EPS

58. P/E = Stock Price / EPS

59. High P/E -> Overpriced stock (Not always!)

60. Indicator of market sentiment towards the stock

62. PEG = (P/E)/ (projected growth in earnings)

63. Technically Lower the better

64. Compare it to P/E

65. This is projected ratio, not always accurate!

66. Interest coverage ratio

67. IC = EBIT/ Interest expense

68. Below 1.5 = signs of trouble times!

70. D/E = Total Liabilities / Shareholders Equity

71. Sector based, Auto manufacturing -> High

72. IT companies -> Low

73. Check the competitor or top 5 sector based ratios when considering this

75. Resistance

76. Depends on past prices and volumes of stock traded.

77. All about reading the graphs

78. Out of the reach for this presentation

80. It is done to reduce exposure to various risks

81. Hedgers try covering the risks

82. Hedgers try to reduce the risks associated with uncertainty

83. Speculation is opposite of hedging

84. Speculators are risk lovers

85. Speculators make bets or guesses

86. A hedger seeks to cover a foreign exchange risk

87. A speculator accepts and seeks out to accept it to make profit

90. Never do overtrading.

91. Don't enter a trade if you are unsure of the trend.

92. When in doubt, get out, and don't get in when in doubt.

93. Distribute your risks equally among different markets.

94. Avoid taking small profits and large losses.

95. Be willing to make money from both sides of the market.

96. Never change your position without a good reason.

97. Don't follow a blind man's advice.

98. When you lose don't blame it on luck.

100. Investment in good shares

101. Lot of patience