12 charts every investor should know:

1. History of the stock market in one chart

2. The Psychology of a Market Cycle

3. "Experts" will always give you smart reasons to sell in the short term, but you will regret it in the long term

4. Largest companies by market cap (1960-2022)

5. Compounding is the 8th wonder of the world

Most people want to be an investor

But most investors don't know understand how interest rates control inflation

Here's how interest rates control inflation:

1/ Raising interest rates can send a shockwave throughout the whole economy.

It can sink consumer confidence, result in fewer jobs, and tank stock prices.

If the Fed goes to fast, it will send the economy into a recession.

So why would they even raise interest rates?

2/ Let's start with the basics

If you borrow money, you will have to pay back a little extra (interest) to make it worth while for the bank.

If you save money, you will be given money (interest) as a reward for keeping money in the bank.

3/ The size of your reward depends on the state of the economy

There is no single interest rate in the economy. You have thousands of commercial banks setting their own interest rate for their customers.

This is all influenced by the central bank (Federal Reserve)

4/ What do Central Banks do?

A central bank is like a bank for banks.

Banks have reserves which is essentially their cash on hand.

Banks can earn interest when they leave their excess reserves with the central bank.

Most people want to be an investor

But most investors don’t know how to read a cash flow statement

Here’s how to read a cash flow statement:

The Cash Flow Statement shows how cash moves in and out of a company.

The cash flow statement is presented in the quarterly and annual company filings

The things I ask myself:

-Is operating cash flow positive or negative? (Positive)
-Is capital expenditures less than OCF? (Yes)
-Is the company buying back stock or issuing new shares? (Buying back)

These are 3 simple questions to ask yourself before reading one

Cash flow is divided into 3 sections:

-Cash from operating activities
-Cash from investing activities
-Cash from financing activities

These are the 3 main components of every cash flow statement.

1. Operating Activities

Cash flows from operating activities explains the cash flows within the business for its normal operations over a particular period.

This will show whether a company is capable of generating positive cash flow to maintain and grow its operations.

Most people want to be an investor

But most people don't understand common investing terms.

Here are 10 terms that every investor should know:

1/ Dollar Cost Averaging

This is when you invest a fixed amount of money on a regular basis.

It does not matter what the stock market or individual stock price is doing.

When you use this method, you don't have to time the stock market.

2/ Cynical Stocks

These are stocks that move in cycles with the broader economy

For example, when the economy is booming, airlines and hospitality stocks are booming as well.

If the economy sucks, people don't have the extra money to purchase airline tickets.

3/ Book Value Per Share

This is a ratio that takes the firms common equity divided by its number of shares outstanding

A possible undervalued stock will have a higher book value per share compared to its underlying stock price.

4/ Intrinsic value

Intrinsic value is when you determine the true value of a stock price.

Once you determine intrinsic value, you can determine if the stock price is undervalued or overvalued.

Warren Buffett preaches finding the intrinsic value of a stock.