lesson2--2011--introduction.ppt

1、Investment science,Chapter 2 Introduction,The only thing easy about money is losing it. It is hard to make money in a competitive market but losing it is one of the easiest things you can ever do.,3,Basic questions before investment,Three W What to buy? At what price? How to sell?,What is investment

2、,Investment is the current commitment of money or other resources in the expectation of earning future benefits. Illustrations of investments,Students comment,Professor Lin,老师好最近又有些想法，主要是把发散的思路聚敛、提炼一下。回头看，最大的成果是明白“投资是什么”：（1）投资的目的：保本生息。也就是巴菲特强调“保本，保本，再保本”任何希望利用短期价格趋势来获利的行为都是投机。（我觉得这个比老师上课说的用持有时间长短来区分

3、更好一些,Cont,(2) 投资的要点: 何时何价买入或持有或卖出何股.,Investment, speculation and gambling,Distinguishing the investment from the speculative approach and gambling,8,Gambling,Quickly For entertainment Creates risk artificially, via the rules of the game. Rather than imply similarities between investment, speculation

4、, and gambling, this illustrates the differences between them.,Characteristics of gambling,1. Indefinite 2. Time limit 3. Zero sum game,9,10,Speculation,Typically last longer than gambling but have shorter holding period than investments Buy low and sell high High risk Emphasis on trend, cash flow a

5、nd psychology e.g. Speculating on common stock IPOS,11,Line up,ICBCs IPO,27-10-2006 ICBCs US$21.9 billion stock sale smashed the previous record, a US$18.4 billion IPO by Japanese mobile phone company NTT DoCoMo Inc. in 1998. The stocks price rocketed up 14.6 percent to HK$3.52 (US$0.45) compared to

6、 its IPO price of HK$3.07 (US$0.39) per share.,12,15,Speculation contd,Buying an initial public offering of common stock on the day of it first goes public in hopes of selling the shares a day or two later at a higher price is a popular speculation.,IPO return,Over a samples of 1526 IPOS, Jay Ritter

7、 reports the average speculators return was 14.3% during the first day after a common stock has an IPO.,16,17,Speculation contd,The rich may speculate; the average Joe cannot speculate; the poor must speculate. -quotation from German Master of StockAndrea Kostolany,18,Investing,The U.S. Treasury def

8、ines in investment to be a market asset that has a holding period longer than one year. U.S. T-bill that was originally issued with a maturity of 3 months to be a speculative transaction?,19,T-bill,20,Investing contd,Investors original attention To differentiate between gambling, speculating and inv

9、estment, it is sometimes more logical to consider the investors original intention than to measure the investors holding period.,Investor,Profit comes from valuation Emphasis on fundamental analysis Independent ideas, sometimes contrarian,Contd,Furthermore, what is initially undertaken as a short-te

10、rm speculation can turn into a long-run investment as additional information becomes available.,22,23,Reasons to invest,Question,How to get super rich?,25,Reasons to invest,To be financially independent Earn money and make money Who is the richest person in the world? Berkshire Hathaway Investment r

11、eturn chart Financial freedom is the stone of a marriage Better future life,Annual return chart,26,27,Who is he?,Warren Buffett,Born August 30, 1930 (age80) Omaha, Nebraska, USA Networth US$52.4 billion (2007) US$62 billion (2008) US$47 billion (2009) In 2007, Buffett was listed among Time Magazines

12、 100 Most Influential People in The World.,28,Expensive lunch,Buffetts lunch sells for record USD650,100 in 2007. Last years winner, Yongping Duan, bid $620,100 to dine with Buffett USD2,110,000 with Zhao Dan Yang in 2008,29,It is not that I want money. It is the fun of making money and watching it

13、grow.,Question,Is Warren Buffett your investing role model?,Reasons,To avoid money devaluation,32,Reasons,To shift your purchasing power from high-earnings period to low-earning period of life.,Asset classification,Real assets versus financial assets Real assets-assets used to produce goods and serv

14、ices- -the land, buildings, machines and knowledge that can be used to produce goods and service.,35,Real asset contd,The material wealth of a society is ultimately determined by the productive capacity of its economy, that is the goods and services its member can create,36,Principles of Economics,A

15、 Countrys Standard of living Depends on its Ability to Produce Goods and Services.,Financial assets,Financial assetsclaims on real assets or the income generated by them, such as stocks and bonds. Individuals can choose between consuming their wealth today or investing for the future. If they choose to invest, they may place their wealth in financial assets by purchasing various securities.,38,Financial assets contd,Such securities are no more than sheets of paper or, more likely, computer entries as do not contribute directly to the productive capacity of the economy. Instead, these