BLUE DOLPHIN

2nd Rule: A stock must have long term prospectsHow do we identify a company with long term prospects?Predicting which company's will be around in 30 years is impossible, but one's that won't be around are easy to predict.Why do we want to invest in a long term company?Sustained EarningsTaxesWhat is Capital Gains Tax?What is the difference between short term gains and long term gains?

1st Rule: A stock must be managed by vigilant leadersDefine Vigilant LeadershipCarefully observant or attentive; on the lookout for possible danger. And the possible danger is the debt.Understand the Debt to Equity RatioWB likes Debt/Equity Understand the Current RatioHow will the company handle debt in the next 12 months?It compares the current assets to the current liabilities.WB likes the cur..

How does the price of a bond change with interest ratesHow to use the BuffettBooks.com Bond Calculator

What is a yield curve?x-axis: Terms (years)y-axis: Yield (%)Generic positive yield curve (natural)Generic flat yield curveGeneric inverse yield curve (very rare)How can I use a yield curve to predict market behavior?Yield curves are a valuable tool that help investors understand how the federal government is trying to steer the economy.Flat and inverse yield curves mean that the FED wants to slo..

What is a credit ratingMoody's, Fitch, S&PEvaluate the ability of municipal or a company to pay backWhat does a rating tell me about riskLooking at the statistics, the risks of not paid back from BBB muni. and AAA company are the sameThink in statistics, yourself.Don't get swung by others

What is InflationHow and why does the government inflate the currencyWHY?A moderate amount of inflation protects the country from deep recessions / depressionsIt serves as an indirect form of taxationHOW?The FED increases the money supplyReserve ratio. 1/Reserve ratio = multiplier to the base moneyHow does inflation affect bonds and stocksBondActual Bond Yield = Bond Value - Inflation RateTIPS =..

Risk Vs RewardRisk: You'll loose all or some of your moneyReward: You'll make a lot of money that you didn't have to work forWhat is the baseline value for risk and reward10 year, U.S. Federal Note is the baseline investment value. This is our benchmark and it changes everyday.What causes financial risks in a businessExcessive DebtCompanies incur debt because they want to speed up timeThey can o..

10. Stock Market Crashes and Market BubblesUnderstand Fear and Greed CyclesWarren Buffett's opinion on Market PsychologyAccumulating Shares versus Trading Shares11. What is the FEDWhat is the FED?What is the mission of the FED?Maximize employment and stabilize pricesSupervise and regulate banksMaintain the stability of the Financial systemService debts for the US. Federal GovernmentHow does the ..

What is a stock market?How does the stock market work?Sellers > Buyers: Buyers MarketSellers What is a limit and stop order?Market order is an order that doesn't care about the price but buy/sell shares.Stop order: Transaction happens once, so the price you set is not the same if you sell them to more than one buyers. For example, selling 100 shares, you could sell it at $65 for the first 10 sha..

Simple InterestSimple interest = # of coupons * coupon payment$1,500 = 60 * $25Coupon yield is set when a bond is issued. It is the annual coupon divided by the par value.Coupon Yield = 1 year coupon payments / Par Value5% = $50 / $1,000Compound InterestCompound interest is a return when you keep reinvesting the coupon every time you the money.Current YieldCurrent Yield is the annual coupon divi..