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High Risk Investment

1. Intro

Now I have learned something about investment, especially about low risk and medium risk investment.

For low risk investment, the money fund market maybe the best for now, 5% APY is not bad

For medium risk investment, I guess the SP500 should be fine, it will capture the overall economic situation

For the high risk investment,

  1. What options do I have
  2. What’s the pro and con of each of them
  3. Tax consideration

2. Options

Individual stocks: single companies

Cryptocurrencies

VC: venture capital, investment in early-stage companies

Leveraged ETF: use financial derivatives to amplify the return of an underlying index

Options and Futures: contracts provide the right but not obligation.

3. Stock

How to predict stock price?

  • Market trend
  • Economic indicator
  • Company specific

3.1. Fundamental Analysis

Goal: measure a security/stock/bond etc’s intrinsic value

How: examine related economic and financial factors

What: financial situation, current market and economic conditions

Usage: determine the number with current price

Sources: 10Q (quarterly), 10K(annual), 8K(must report event)

Assumption: stock’s current price often does not fully reflect the value of the company

3.1.1. Quantitative Method

Balance sheet: Assets=Liabilities + Shareholder’s Equity

  • Just the snapshot

Income Statement: revenue, expense, profit

Statement of Cash Flow: inflow and outflow over a period of time

  • Hard to manipulate

Revenue growth

P/E Ratio: price / earning per share

3.2. K Line / Candlestick Charts

3.3. Moving Average

3.4. Volume Analysis