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Johnny Walsh

Investing 101

Interesting facts:

Born and raised in the small town of Arthur, ON 1 younger brother and sister Saw his dog kill and literally devour an entire ground hog (video to prove it) Shook hands with Bobby Orr You miss 100% of the shots you dont take. -Wayne Gretzky Michael Scott

Favourite quote:

Future:

One day own a community pharmacy or possibly go into industry

Investing 101
John Walsh H.BSc. & BSc. Pharm Candidate

February 06, 2013

What does an investor look like?

Why You Should Listen


Soon to be in a higher tax bracket

Another option

Banks/financial advisors

Put you in control PHARM 370 Important to start early

Start Early: Compound Interest

Outline
Step-by-step how to get started Choosing a broker Opening an account Investing strategies How to screen for high quality stocks How to select a stock Determining value Making the purchase

Choosing a Broker

Choosing a Broker

Stockbroker: Regulated professional individual licensed to buy and sell securities (such as shares of stock) on your behalf. Examples:

The Banks

TD Waterhouse, Scotia iTrade, BMO InvestorLine, National , CIBC Investors Edge, etc

Trade Freedom Virtual Brokers Questrade

Interactive Brokers

Questrade

Low commission fees

No yearly fees or hidden costs


Great customer service Easy to start-up and navigate

Flexible

Stocks, options, forex, bonds, commodities, mutual funds

Safe and secure

Opening an Account

Questrade: Opening an Account

Questrade: Opening an Account


Personal Information

Name, address (same as Drivers License), birthdate, SIN etc.

Drivers License Bank information (account number, and transit number) Type of account

Questrade: Opening an Account

Questrade: Opening an Account

Once all forms are completed:


eSignatures Scan and upload copy of Drivers License Scan and upload copy of void cheque Fund account (at least $1,000)

Activation in 3-5 business days

How to Select an Investment

Investing Strategies

Value investing Technical analysis Day trading Swing trading Momentum trading Chart (pattern) trading Index investing Price/volume analysis

Value Investing

Buy and hold approach

Selecting stocks that are trading at a discount to their future value


Focus on high quality stocks

Screening for Stocks

Screening for Stocks


Large companies

Market Capitalization > $10 billion

Competitive advantage

Return on equity (ROE) >10%/year Net profit margin (NPM) >10%/year

Growing

Revenue >10%/year Earnings per Share > 15%/year

No fear of bankruptcy

Current assets/current liabilities >1 (current ratio)

Screening for Stocks

Screening for Stocks

Finviz.com

Selecting a Stock

Should You be a Buyer?

WDC: Should You be a Buyer?

Assumptions

Future profit growth (EPS)

Maximum 15% for calculations


Price of 1 share/ Earnings per share (EPS) Maximum 17 for calculations

P/E Ratio

Desired Return

WDC Financials

WDC: Over or Undervalued?

How to Make a Purchase

References

Canadian Investor Protection Fund. Member directory. Questrade. http://www.cipf.ca/Public/MemberDirectory/CurrentMembers.aspx Graham B. The intelligent investor; revised edition. New York, NY; Harper. 2006. Greenblatt, J. The little book that beats the market. John Wiley & Sons. 2010. Finviz. http://finviz.com/ Google Finance. https://www.google.ca/finance?hl=en&ei=ia0JUeDUA8_FqQG9gwE Ho K, Robinson C. Personal financial planning, 4th ed. Concord, ON; Captus Press Inc. 2005. Kwag S, Lee S. Value investing and the business cycle. Journal of Financial Planning. 2006:7;1-11. Louis K, Chan C, Lakonishok J. Value and growth invetsing: review and update. Financial Analyst Journal. 2004:60(1);71-86. Maunoussin M,Johnson P. Competitive advantage period: the neglected value driver. 1997:26(2);67-74. McGugan I. Targeting a 15% return with these stocks. The Globe and Mail. Published Jan 2013. http://www.theglobeandmail.com/globe-investor/investment-ideas/number-cruncher/a-benjamin-graham-inspired-search-forvalue/article7494862/ Mizrahi C. Getting started in value investing. Hoboken, NJ; John Wiley & Sons. 2008. Piotroski J. Value investing: the use of historical financial information to separate winners from losers. Journal of Accounting Research. 2000:38;1-41. Porta R, et al. Good news for value stocks: further evidence on market efficiency. The Journal of Finance. 1997:52(2). 859-74. Questrade Canada. Questrade.com Reuters. Financials: Western Digital Corp. http://www.reuters.com/finance/stocks/financialHighlights?symbol=WDC.O Rothery N. Want bargain stocks? How to sculpt a value portfolio. The Globe and Mail. Published Nov 2012. http://www.theglobeandmail.com/globe-investor/investment-ideas/strategy-lab/value-investing/want-bargains-how-to-sculpta-value-portfolio/article5537445/ Speidell L, Graves J. Are growth and value dead? A new framework. The Journal of Investing. 2001:10(4);6-13. Sorensen E, Thum C. The use and misuse of value investing. Financial Analyst Journal. 1992:48(2);51-58. Statscan. Average hourly wages of employees, Ontario. http://www.statcan.gc.ca/tables-tableaux/sumsom/l01/cst01/labr69g-eng.htm Tattersall R. Deep-value investing: bargain hunting need not be a crap shoot. The Globe and Mail. Published Jan 2013. http://www.theglobeandmail.com/globe-investor/investment-ideas/bargain-hunting-need-not-be-a-crap-shoot/article7975763/ Western Digital Corporation. 2012 Annual Report and Form 10-k.2012. https://materials.proxyvote.com/Approved/958102/20120917/AR_142253/

Buffetts Performance

Recent Example

Price on July 10th, 2012: $71.30 Price as of Jan. 30th, 2013: $83.63 Two dividends of $0.94/share received Return to date: 19.9% (~7 months)

Take Home Messages


Investing is something anybody can do

Lots of resources and tools at your disposal


Value investing is a great strategy to get you started

Someones sitting in the shade today because someone planted a tree a long time ago.
- Warren Buffet

Money doesnt grow on trees, so it is up to you to grow your money.

Questions and Answers

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