OK, let’s get straight into it. Last lesson I stated we would move onto trading and WICS, but I didn’t want to jump onto that without first showing you what to look out for before you do.
Company’s will list on a stock exchange in order to expand and raise capital. Basically, they are selling a stake in the company to shareholders, who will earn money if the company goes well. The company then in-turn can use the money raised from the sale to purchase more assets and grow the business. There is an enormous amount of innovation in SL and thus, many individuals and businesses are returning good profits from excellent turnovers. Some of these businesses have listed on WSE in order to grow their ideas, brands and profits.
That’s a really quick overview of why these guys are here, now we need to have a look at whether or not it’s a good idea to buy in.
On the WSE, the first place you will look is also one of the most important; Research.
This section contains everything you need to know from a trading perspective, about the company, its financial situation and its stock position. Now, there is about 6 months worth of training material that I could go through to explain the basic reports and Corporate finance, and that would get you to a newspaper-reading capacity, but, in order to be able to read into these items and make calculated risk assessments on this information, you would be at it for years…so I will keep it really simple.
For today’s lesson, we will take a look through the listed company
Step 2: Click Research link from the top menu bar
Step 3: Scroll down to
Now, you will be presented with the Company Profile. Here you can see the CEO and management info, shares and market capitalisation and links to all other company information that is stored with the WSE.
(Note that market capitalization is a market estimate of a company's value, based on perceived future prospects, economic and monetary conditions, and therefore largely independent of a company's history. Stock prices can also be moved by speculation about changes in expectations about profits or about mergers and acquisitions.) - from wikipedia
All this information will be helpful to you in determining whether or not to buy or even sell your stake in this company.
As you begin to create your stock portfolio, there are a few of these items that are paramount before you get started; Historical pricing, recent trades and recent announcements. I am trying not to delve too deeply into this, so let’s take a look at HOT and I will try to wrap this up for you.
Historical pricing – Hopefully you are keeping up with the steps and are still on the Company Profile page. If not, just follow the steps above before you continue.
Step 4: Click the link in the lower part of the page “View Charts and Graphs”
You will now have the Charts for HOT screen available. If you cannot see the charts listed, I suggest getting Firefox and/or changing the cookie and https settings of your browser.
Here you will see a share price movement chart, a share price candle stick chart, a trading volume chart and the current shareholder’s pie. We are interested in the first 3
Step 5: Go ahead and select the link in the Share price movement chart for “Last 30 days”
This will change all 3 charts to the same period. You will notice now that the share price for HOT was about $L3.00 on August 27, (2007) and has jumped around a little over the time and is now trading at about $L3.60 on September 26, (2007).
The second chart will actually show you how each of these days played out. During the day you will get an Open and Close price, and in some instances a Min or Max depending on whether or not there was large movement during the day. Basically, this means the price that the stock started at in the day, its biggest movement and then the price it closed at. As the WSE is a 24HR trading system, the close is actually the open for the next day.
You can place your mouse over the charts at individual points to get the exact details.
What we will do now is look at days that were significant during the period. These are typically days where the volumes were high and may have had a movement in price.
Hover your mouse over September 24th, (2007) you will notice that the open was $L2.80 and the close was $L3.80. That’s an increase of over 26%, which means that the company’s stock went up more than a quarter of its value in 1 day!
Now do the same with September 18th, (2007) you will notice that it closed at $L2.87 but traded as low as $L1.50 during the day. That’s a loss/gain of over 48%, almost have of the value!
Recent Trades -
BUT: If you now take a look at the volumes for those days above.
September 24: 60533
September 18: 1085
Big difference? This shows you that the company has a pretty solid standing with its price. If the stock was to plummet, as it did on September 18, nobody panicked and sold out, it’s clear that someone put in a small trade at a ridiculous price and it was executed. The reason I am pointing this out, is that there exist traders in all stock markets RL and SL, that will try and play with the markets prices in order to profit from fluctuations. This is not controlled by the company, so just be aware before you jump on a bargain!
Lastly, lets take a look at the companies communications.
Step 6: Click Research again and find
Step 7: Scroll down to the link section again and click “View Company Announcements” link
You will be taken to the View Announcements screen. Here you can see all the communications that the company has made to the market and shareholders. These announcements may include changes to Management or Company strategy, important or even exciting news about new developments, company financial reports and general “new” company information.
You will now see an announcement about the investment, which seems rather positive and shows that the company looks to be liked by outside investors/companies. This may have had some influence on the increase in price that seen in the following days.
Keep your eye on the News section of WSE, the things company CEO’s announce, could make or break your investment!
That’s all for today, our next section will show you how to BUY and SELL your shares.
Until then, farewell.
Logansan Oh
- CEO, Chairman
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