BUY ONE, GET ONE FREE! BUY THREE PRODUCTS, GET THE THIRD FREE!! TRIPLE POINTS THIS WEEK-END ONLY!!! Whats our favourite???

BUY ONE, GET ONE FREE!

BUY THREE PRODUCTS, GET THE THIRD

FREE!!

TRIPLE POINTS THIS WEEK-END ONLY!!!

What’s our favourite???

You would have paid $1,000,000 last month

This month, you would pay $900,000

… FOR THE SAME CAR!

You would have paid €100 last month

You would pay €80 this month

… FOR THE SAME DRESS!

You would have paid €40 last month

You would pay €20 now

… FOR THE SAME STEAK!

A new model coming out

Last season’s fashion

Coming up to sell-by date

Too little demand

Too much supply

Use of a loss leader to bring in customers

Of Course!!

Would you prefer to buy at £1.95?

Would you prefer to buy at £1.04?

When the stock was “on sale” of course!

Would you prefer to buy at €17.26?

Would you prefer to buy at €2.03?

When the stock was “on sale” of course!

Would you prefer to buy at $27.73?

Would you prefer to buy at $12.08?

When the stock was “on sale” of course!

Answer:

You are buying the same product for a lower price

No – a company is dynamic, it’s always changing.

The engine of a car won’t change over a year

The engine of a company certainly can…

It is IMPERATIVE not just to buy a stock because it’s at a lower pricelower price, but

because it is at better valuebetter value.

Oscar Wilde

Race ahead of them…

How can you tell if a stock is at good

value when the price falls?

Dividend Yield

Price/Earnings Ratio

Price/Cash Ratio

During the last class, you bought and sold

within minutes.

An investor buys and holds for the

medium to long tem (i.e. months or

years rather than minutes or days)

A. To avoid HUGE transaction costs!

B. To let the stock (i.e. the company)

develop ad increase in VALUEVALUE and

hence increase in PRICEPRICE!

Lack of awareness – they don’t know

what they are doing

They have unrealistic expectations

They neglect to take transaction costs

into account

They want faster money

Yes… for about 5% of traders

As happened in the last class, successful traders simply take the money off unsuccessful traders.

Ordinarily, the successful trader is the professional institution since they get the information first

For somebody with less time and knowledge, you have a much better chance of doing well as an investor, because new money IS being created as the companies develop.

If you do choose the trader route, remember the odds are stacked against you.

Speculating

Short Term Bets Active Buying &

Selling Uncertain basis for

buying and selling

Investing

Medium to Long Term

Investing on the Basis of Company Fundamentals – Dividend Yield, Price/Earnings Ratio etc