1: Hi again. I'm Adam. Welcome back to www.engvid.com. Today we're going to look at some business

6: English, with an introduction to investing. Now, what is investing? Investing is putting

12: your money someplace with the hope that more money will come back to you later. Okay? So

19: it's making money over time. Many ways to do it, but today we're going to look more

24: specifically at the stock market. Now, before we begin to look at the stock market, we need

31: to know all the different words that you will find in the stock market discussion.

37: Of course, we have to look at "stocks". So: "stocks" and "shares". Now, many people get

44: confused: what is a stock? What is a share? Realistically, these are basically the same

49: thing, but subtle differences between the two. So, when a company decides that it wants

56: to make money, so it can expand its business, it wants to raise capital. "Capital", it's

63: a big word, there's lots of meanings to it. We're going to look at that a different time.

66: But for our case, "capital" means money. They want to make money, they want to raise capital

71: so they can grow their business. So what they do is they sell stock. Stock is a partial

77: ownership of the company. So when you buy stock, you get a piece of paper, you get a

82: certificate that says that you own part of this company. And because you own part of

87: the company, you have certain rights. You can make... You can vote for changes, you

92: can vote for things that the company should do.

95: Now, what is a share? A share is an equal piece of the stock. So, for example, a company

103: sells $100 worth of stock. That's the full amount of the ownership that the company makes

112: available to the public. Now, this stock, this total amount, they divide into 100 shares.

123: Okay? So you buy as many shares as you want of this stock. So because you have 100 shares,

131: the full stock is $100. Each share is, of course, $1. You buy 10 shares, that mean...

138: That means you're buying 10% of the available stock. You're buying $10 worth of shares.

145: Now, you own stock, you own shares in the company. In that case, it's the same thing.

150: Now, when you talk about stocks, you can say: "I own stocks."

155: So let's go to this word quickly: "portfolio". Your portfolio is the collection of your investments.

162: You may have stocks, you may have mutual funds, you may have bonds, you may have commodities,

167: you may have real estate. You may have all kinds of different investments. If part of

172: your portfolio is stocks, you say: "I have some stocks." It means I can have five company's

178: stocks. But when you say: "I have shares", then you have shares of a company. Okay? I

185: have stocks in 10 different companies. I have shares... I have 10% or I have 100 shares

192: in this company, I have 50 shares in that company, I have 2,000 shares in that company.

198: But all together, you have stock. Okay?

201: So it's a total amount of the companies that you own.

204: Now, if you want to buy stocks or trade stocks, if you want to buy and sell your shares, you

210: can contact a "stockbroker". Okay? A broker is somebody who deals with trades; buys, sells

218: stocks on the stock market. These days, you can just go online and find a "brokerage"

227: which is a website or a company that lets you buy and sell your own stocks and shares.

232: Okay.

233: Next: we have "IPO", this is "Initial Public Offering". Sorry I'm a little bit off line,

245: here. When a company decides: "Okay, we need to make more money. We need to raise capital.

251: We need to sell some stock of our company." So the first time that they sell this stock,

257: there's a big event, you know, like it's a big promotion, they have to market it, they

262: have to tell the public: "Look, we're going to sell stock. Get ready." This is the initial

267: public offering. The first time that they sell stock. We actually don't say: "Sell".

272: They don't sell stock; they issue stock. And then the stock brokerage or the stockbrokers,

278: they buy and sell the stock.

281: Next: "ROI". This is a very important thing to consider. "Return On Investment".

291: Before you buy anything, before you invest your money in anything,

294: you always have to consider your ROI.

297: How much money do you hope to get back? How much money do you think you will get back?

303: Because at the end of the day, a stock market is a gamble. There's high-risk and there's

308: low-risk companies. Your return on investment, obviously, you're hoping to make money. You

314: hope to get a positive yield.

317: A "yield" is basically the percentage gain that you will make on your investment. So,

325: how much did you get back? What was your yield? Oh, 5%. It means if you sold... If you bought

332: $100 worth, and then you sold it for $105, your yield was 5%. Your return on investment

340: was $5. Okay? So that's how we talk about the money that you make from your investment.

348: Now, you can also buy "bonds". Bonds are different from stocks. A bond is a debt. You are buying

356: a debt. Basically, what you are doing is you are lending money to a company or the government.

362: You can buy government bonds or corporate bonds. And what you're doing, you're lending

367: them money, and they guarantee you-the company or the government-guarantee you a certain

373: percentage of interest and a certain amount of time. So if you buy a five-year bond at

380: 7%, at the end of the five years, you get your money back plus your 7% interest that

386: you earned. So it's guaranteed. It's a bit safer. We're not going to talk about safe

392: and unsafe, because there's a lot of junk bonds, there's a lot of bad bonds. But generally

396: speaking, bonds are very safe, but they're also... Have a low yield. Because they are

402: guaranteed, the return is a bit lower. You could make some investments with a very high

407: yield, but very high risk. Okay? "Risk" means the danger of losing, as opposed to gaining.

416: Now, you can also buy "mutual funds". A mutual fund is a... Basically, it's a company that

424: manages your money. So you put money into this mutual fund, the mutual fund manager

431: will then take your money, plus this guy's money, and that guy's money, and that woman's

435: money, and that lady's money - he will take all this money and he will buy what he thinks

440: are good investments; stocks, bonds, commodities, equities, all kinds of things into one group

448: and everybody gets their share. Okay? So, when the entire group of investments goes

454: up, each member of the mutual fund gets his or her return on investment, their yield.

461: "Portfolio" we already talked about.

463: Now, when we're talking about the actual stock market, these days, there's a lot of "volatility"

470: in the stock market. Volatility is the sense of excitement or nervousness that enters the

477: equation. So people, they hear a bit of bad news from this part of the world, they get

483: nervous because they think that will affect their stock, and they start selling all their

487: stock. So their stock price or their shares go down in value. So then other people, they

495: say: "Oh my god, everybody's selling this. I better sell mine, too." So they start selling.

499: And then the smart people, they see: "Oh, everybody's selling. I'll wait until it gets

503: really low, and then I'll start buying everything for really cheap because I know it will go

506: back up." So volatility is more like the mood of the investors. And people get scared, they

513: sell. People are stay calm, they buy. Okay? So it creates a lot of "fluctuation".

521: A lot of fluctuation in the market. Fluctuation is the up and down movement.

526: So stocks go up, they go down, they go up, they go down. Something that is steady,

531: goes up steadily or goes down steadily. If it's up and down, it fluctuates.

536: Okay? This is a very good word for all kinds of situations.

541: Now, there are two types of market activity. There is a "bear market" and there is a "bull

548: market". The easiest way to think about these is to look at the animals themselves. A bear

554: has claws, so when a bear uses his claws, he's pulling everything down. So a bear market

561: is a market that is tending downwards, that is losing value. A bull has horns, so when

567: a bull uses its horns, it's pushing things up. So a bull market means the value of the

573: market is going up. Usually it means there's a bit of a force, like something is making

578: it go down, that's the bear; something is making it go up, that's the bull. Something

582: is pushing it up.

584: Now, if you want to know how the markets are doing, you could look at any specific "index"

588: or "indices". This is the plural of "index". Now, I know many of you have heard of the

594: DOW Jones, or the NASDAQ, or the S&P 500, or the TSX here in Toronto. These are indices.

603: Okay? An index means that the stock market took a group, a collection of companies...

610: It's not necessarily random; they have a reason to choose these companies. But they look at

616: all these companies, as a whole: are these companies going up in value or are they going

621: down in value? So if the index is trending up, that means that the whole market is generally

626: doing pretty well. If the index is going down, that means the market is going down as well.

632: This is... This gives you an idea of how the market is trending. So in a bear market, the

639: index will probably start moving down; in a bull market, the index will start moving up. Okay.

645: Now, if you're a conservative investor, it means you don't like to take big risks. You

651: want to put your money in, you want to be sure money comes back. It doesn't have to

654: be big money, but it has to be more than what you put in. So then you would buy "blue chip

660: stocks". A blue chicks... A blue chip stock is owning stock in a company that is big,

669: that is trusted, that has a long history of doing well, of growing. For example, if you

675: buy Microsoft or Apple, these are considered blue chip stocks. Why? Because they're big,

681: they're stable. Over the... If you look at their history, they're generally going up

685: for a long time. You can be sure that they will pay you a good return or that they will

691: pay dividends. "Dividends" are when they have the profits, they share the profits among

697: all the stockholders. So, blue chip companies generally pay good dividends.

704: Lastly, we have "equity". Equity is basically what you owe... Own. Sorry. Not what you owe.

711: What you own minus what you owe. Okay? So, for example, if you own a house, every part

718: of that house that you own is your equity. If you have a mortgage, if you're paying the

723: bank every month to pay for your house, then you take the full house, minus the mortgage,

729: and whatever's left over - that is yours. You own it. That is your equity. So, when

735: you own stocks, that's part of your equity. So it's basically all your "net assets".

742: All your assets, everything you own, minus all your liabilities, everything that you owe

747: somebody; all your debt. Okay?

749: So now that we know all these words, we can start thinking about investing. And I say

756: "thinking" because you want to be very, very, very careful before you put your money somewhere.

760: A stock market is not that much different from a casino. Okay? You can gain a lot of

766: money; you can lose a lot of money. Find out what you need to know, do a lot of research

772: about the company you want to invest in, do a lot of research about the mutual fund manager.

777: Is he or she good at what they do? Do they have a history of success?

782: Then invest your money.

784: If you want to test your knowledge of these words, go to www.engvid.com. There's a quiz

789: there that you can try out. Ask questions in the comments section. And, of course, don't

795: forget to subscribe to my YouTube channel, and come see us again. Bye.