Tag: stock
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8. Mr Market
So far I concentrate my contents on the business and the importance of a good management, now we have to speak about the market price.The stock market is auction based. Roughly speaking; agents that compose the market (institutional investors like pension funds or retail investors like us) offer a price for any security exchanged (for…
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7. How the companies reward us
How far and apparently ethereals entities enter in touch with us? As I explained in the preceding chapters, businesses use the stock market to finance their activities.Basically there are two ways that companies use for financing themselves: debt and equity.My blog focuses on equity holders or also called shareholders.As shareholders we own a piece of…
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6. The eighth marvel of the world
Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” Attributed to Albert Einstein The concept behind the compound interest is very simple.Imagine you have a bank account that earn you an annual interest of 4% (it is an utopias today), if you put 1000USD in…
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5.1 Appendix – Currency Value
In the last chapter “Active or passive investing” I spoke about circulating money.I had written about the injection of liquidity by central banks in terms of advantage for investors.New money in the system pushes high people’s spending, earnings of the company and therefore the value of financial assets like stocks.The side effect is that the…
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5. Active or passive investing
When we are starting to enter in the investing world, we basically have two ways to follow.Passive investing or active investing. What is the difference? Stock market is composed by many companies that produce a broad range of products and services. These companies together make the basement of the country productivity.Because the world follows a…