Common Cents Investment Group Monday January 13 th First meeting of the semester

Agenda CCIG updates Macro update – Weiyi Xie Stock market today Risk management Investopedia results

Spring Semester Update ALWAYS accepting new members ◦ $20 dues for new members ◦ Pizza each meeting, t-shirt, simulator prize Please fill out survey (copies in front) ◦ What do you want to see more of? ◦ Long term or short term investing?

RISE Student Investment Conference Redefining Investment Strategy Education University of Dayton March 27 th - 29 th, 2014 (Thursday – Saturday) Largest student investment conference in world Costs ◦ $165 per registration (register before Jan. 31 st ) ◦ $94 per night per hotel room ◦ $20 travel **See me after if your are interested**

Guest Speakers Professor Matt Sheridan Accounting firms Christian Gabis Luv Sharma Others Will try for guest speaker every 2-3 weeks

Macro Update Weiyi Xie

Financial News for the past month QE tapering: ◦ From $85 billion to $75 billion in January 2014 ◦ Expected to decrease $10 billion every month, until it goes to 0 ◦ What does it mean to the US economy? US debt? US stock? US housing market? ◦ What does it mean to world economy, especially to emerging markets (like Brazil, India, etc)? Dr Janet Yellen was appointed as the new Chairperson of the Federal Reserve

Financial News for the past month Non-Farmal Payroll (NFP) report for December 2013 ◦ Expected: 197,000 new added jobs ◦ Result: 74,000 new added jobs ◦ Unemployment rate: 6.7% ◦ Fed agreed to raise interest rate once unemployment rate reaches 6.5% ◦ Weather? ◦ Others?

Major indexes down today Many companies lowered earnings estimates

Market Cycle Market near all time high S&P 500 Dow

Risk Management Planning for a deviation from expected outcome Will you beat the market? ◦ Average market return is 10% ◦ What’s your opportunity cost if you don’t? How to plan for risk on a single trade? ◦ Protect from significant losses using stop orders ◦ Example to follow

Risk Management Example Account size of $10,000 2% risk - tolerable value of loss ◦ $200 - based on total account value Long QQQ (Nasdaq ETF) ◦ Purchase price $87 / share ◦ Stop order set up at $84.00

Risk Management Example Risk/Reward ratio Set a price target of $96 Stop exitEntryTarget

Risk Management Example 3.5% loss on trade at stop 2% loss on account at stop stop

Trading Journal Keep track of trades over the years Remember market trends Lessons learned Ways to do it ◦ Excel spreadsheet ◦ One page descriptions ◦ Make up your own ◦ Many brokerages have good portfolio analysis tools

Investopedia Simulator Update

Investopedia Simulator Create reference players “Market” ◦ SPY, DIA, QQQ, SLY “Experiment” ◦ Throwing a dart approach ◦ Pick 25 completely random stocks Compare “Market” to “Experiment” at end of semester

Questions???