The Post for the Lazy People - Summary Blog

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The research of my topic went beyond much more than what I originally intended. I picked the topic of "stock market" because that was what I was generally interested in. I'd been researching stocks for a couple months and thought that this project would provide a great opportunity to do more research on what I love. Never was this project overtime consuming or worthless, and I actually thought that this project further enlightened me about my career. Business can be a difficult field, especially if you don't know what you're talking about. But my past blog posts have really helped me understand how the stock market works. Some of my sub-topics were; Market trends, dividends, shorting stocks, the and the RSI Index. Although all of these topics can be confusing, my research and hopefully my blogs made things much more clear for me to analyze. The topics just have become more business vocabulary that will be good for the future. I look forward to applying my knowledge to my college courses and impress all of them with what I know!

Jeremy Lesauski

Blog 5 - RSI Index

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After finishing my previous blog post, I went on the Internet and looked around for other math equations that could help analyze the a company's stock. Since then my research has led me to the RSI Index. The RSI Index is a matatical indicator that allows investors to determine the Relitive Strength of a company (hence why it's called the RSI Index). The RSI is calculated with the following equation...

100-100/(1+RS)
RS = Number of Days it closes positively and negatively

The RSI index is out of 100 total points and the more points a company has, the more overbought the company's stock is. Stocks with a lower RSI value have a stronger potential to become profitable. Traders should be aware that large increases or decreases in a company's stock will severely affect the company's RSI value and it won't be as accurate.

Based on my experience with using equations to determine stock prices, I don't trust the calculations as much as when I watch the company's individual price over a certain period of time. I like to do my research by looking at what days, months, hours a company's stock is the highest. I also like to read about a company's current events and quarterly reports; but besides that I would never personally trust an equation to do my own research.

Understanding Market Trends

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Much like life, the stock market is always changing and only the best people understand it. Understanding market trends is one of the most important things when investing. Understanding market trends can be the difference between success and failure in the investment world. Especially for rookies to the stock market, learning market trends can dramatically change one's investing style. Market trends can change because of a variety of different factors. Some have nothing to do with how the company is performing, rather a company's stock can drop because a CEO has to go to the hospital because of a heart attack. Considering that this still happens today means that CEO's can't tell their employees their status of how they are feeling. Another factor that can cause a company's stock to drop is their quarterly performance reports. Investors like to look at the balance sheet of a company's stock at the beginning of every quarter and look at their liabilities and profits. From there magazines and newspapers report on how that company has done in the past quarter, making the price of the stock rise or fall.

After reading this article, I learned much more about investing and have a much stronger understanding of what type of analysis needs to be done before investing in a stock. I learned a variety of different vocabulary that can help investors further understand the market. The first term is a primary market. A primary market is an industry that lasts for only one to three years, but has the largest margins for profit. The second term is a secular market. A secular market is almost identical to a primary market, however it lasts for ten to thirty years and increases at a more gradual rate. Secular markets make great long term investments and have proven to be stay profitable for a long duration of time. The final thing I learned, and the most important thing, was how to calculate the ROC of a company. ROC or rate of change, has a common formula that can be used to analyze a company's performance after a span of 10+ days to see if they can continue to perform in the same direction. The ROC equation is represented as...


ROC = 100(Y/Yx)

Y= Current price
Yx= Price 10+ days prior

Personally I think that when these market trends are further understood, it's easier for an investor to see what stocks can change the market. This only shows that doing research is necessary for any type of investing, rookie or professional.

Make Money and Do NOTHING

Source: www.onmoneymaking.com

As I countinued my research this week, my research led me to discover dividends. Dividends are the easy way for an investor to make a return on his/her stock. After I watched this Dividend Video Explanation on Investopedia, it really helped me get a better understanding of how to explain what is a dividend.

A dividend is defined as a company's net profits that can be allocated to investors so that it is still kept within the company. Companies can than purchase their shares back which is defined as a share buyback. Dividends are the easiest way to get money, you get payed cash to just hold someone's stock. So even if the company's stock isn't doing well, you could keep your stocks depending on how much of a dividend is payed out at the end of their fiscal quarter.

Dividends can affect the price of stocks because more people want to invest in that company; therefore raising the price of that stock and making more people want to buy that stock. Some economists argue that a dividend policy does not affect the price of a stock, this is called dividend irrelevance.

In my opinion as a mediocre investor, I don't research into stocks with dividends. I look at the stocks that continuously set the same patterns in how they rise and fall, or also known as trends in the market. When I see one of my stocks falling, I don't just sell right away, I look into why the price is dropping and from there I either buy more of that stock or sell what I have and try to make up the loses elsewhere. Because of my short-term investment style, dividends are not for me; If you're a long term investor dividends will work for you. Make sure you know what type of investor you are before making any decision with money in the stock market. 

Volkswagen - How to Profit

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Last week Volkswagen stock took one of its biggest hits in company history, dropping more than $160 per share within the past 6 months. Amateur investors would think, "How am I supposed to look at this as an investing opportunity, they are losing money!" That is what today's lesson is about, shorting stocks.

In the rare case like Volkswagen, where a stock continuously drops, investors have the option to short Volkswagen stock. What does shorting a stock mean? Shorting a stock is when someone sells a stock in advance of acquiring them, with the aim of making a profit when the price falls. Here's how shorting works, let's say I had 100 shares of Volkswagen stock for $200 before the price fell. Once Volkswagen's price starts to decline, other investors or traders take my stock in Volkswagen and sell it  before the price goes down. Once it does go down, to $100 for example, the investor that sold my stock rebuys it for $100 dollars per share and gives the stocks he borrowed back to me; but as he gives me back the shares that he borrowed, the investor keeps the $100 in difference he made from buying the stock at a cheaper price.

This ment that Volkswagen was a gold mine, their stock had been dropping for along time in their history, but this was one of the biggest drops it had seen in the companies history. This allowed for investors to continually short Volkswagen stock for massive profits.

How to Become Rich

Source: http://usd24.com

• Briefly explain why you are interested in studying your topic:  
• For as long as I can remember, the stock market and business has always caught my attention. Going into freshman year I knew nothing about business and the vocabulary/terms; but as I progressed through central, I’ve taken more business classes and do more research on companies. I finally got around to starting up a ScottTrade account, so I can invest my money and learn some lessons from the real world. This class project is to help me further progress my investing career, and determine if fundamental or technical analysis is better for my investing strategy.

• The overall question I plan on answering by the end of the project:

How should one invest in order to become prosperous?

• Sub questions I will need to answer in order to answer the overall question:
• What makes the economy go up and down?
• How do I know when to invest and when to sell.?
• What commodities rise and fall?
• How do I invest in foreign markets or foreign currencies?

• My plan of research (what specific Library Databases, specific websites, names of authors, people, etc. will I pursue to find the answers to the questions above):
• Investopedia
• Business Insider
• CNN Money
• The Stock Market

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