Category: Minute

Hello members,

Nolan Laplante brings you the following, his first blog.

Bid, ask, and mark are some of the fundamental terms used when discussing orders. A bid is the price an investor is willing to purchase the security. If an investor offers to buy 500 shares for $16.45 and there is a seller in the market that wants to sell at that price then the transaction is completed. An ask is the price a seller is willing to sell for. It is basically the opposite of a bid. Another fundamental term is the bid-ask spread. The bid ask-spread is virtually the same as the range found in mathematics for charts: the difference in price between the highest price that a buyer is willing to pay for an asset and the lowest price a seller is willing to sell for. For example if the bid price is $6 and the ask is $8 then the bid-ask spread is $2. Finally, the mark is the average of the bid and the ask. In our experience, orders placed at the mark are usually filled in a timely manner.

The President’s addendum follows.

Exercise (answers to be emailed to President.):

1. If I wanted to buy the underlying right now, would I be buying at the bid or the ask?
2. If I wanted to sell, would I sell the bid or the ask?
3. What would happen if the bids and asks at different exchanges are different?

Research what is arbitrage, and what middlemen and market makers are. There is no task with this research.

– Nolan Laplante and Michael Trehan

Warren Buffett is the most successful investor of the last century. But who is Warren Buffett? Warren Buffett is the CEO and Chairman of Berkshire Hathaway. Buffett always had a keen interest in the stock market from an early age. During a trip to New York at age 10, he made an effort to visit the NYSE. At age 11 he bought 3 shares of Cities Service.

Buffett grew up and attended Columbia Business school, after being rejected by Harvard. At Columbia Business school, Buffett learned from the great Benjamin Graham. After college, he found out that Graham worked on the board of GEICO. Buffett stormed over to the GEICO headquarters, where he met the VP Lormier Davidson. They chatted for a while about the insurance company, and to this day they are good friends. 2 years later, he accepted a partnership from Graham. After Graham’s retirement in 1956. At the time of Graham’s retirement, Buffett had amassed about $174,000 USD (1.47 million dollars USD today).

By 1962 Buffett merged his partnerships into one. He later took over a textile company named Berkshire Hathaway, which by 1966 had been turned into an insurance firm. Even though Berkshire Hathaway today has reached pinnacles of success, Buffett regards it as one of his biggest mistakes. Currently he holds a majority stake in Berkshire Hathaway.

Berkshire Hathaway is a large firm that controls smaller subsidiary companies. Hathaway owns majority/minority stakes in almost all major companies including Geico, Coca-Cola, Heinz, etc..

In 1979, Buffett made it on the Forbes 400 list for the first time in his career. Warren Buffett today is consistently ranked as one of the world’s wealthiest people, with a net worth of $67,000,000,000 USD ($67 billion USD).

Buffett is recognized for his outstanding philanthropic work and his frugal lifestyle. So far this year Buffett personally donated over 2.8 billion dollars to several charities! These charities included the Bill and Melinda Gates foundation. In 2012, TIME magazine ranked him as “One of the World’s Most Influential People.”

Sources: “Warren Buffett.” Wikipedia. Wikimedia Foundation, 26 Nov. 2014. Web. 26 Nov. 2014.

Morrell, Alex. “Buffett Donates $2.8 Billion, Breaks Personal Giving Record.”Forbes. Forbes Magazine, 15 Jan. 2014. Web. 28 Nov. 2014.

Level: Beginner

A golden cross is a basic bullish pattern that forms when a shorter term moving average “crosses” above a longer term moving average. An example would be if ABC’s 15 day moving average rose above it 50 day moving average. Many technical analysts interpret this pattern as a sign that a new trend is forming or that the existing trend is getting stronger. A rise in volume immediately after the cross helps confirm the pattern.

Death crosses are the exact opposite: when the shorter term moving average crosses under the long term moving average. Death crosses are regarded as a bearish sign, and they, like golden crosses, are often confirmed with a rise in volume after the cross.

This is my first minute blog, which should take you under a minute to skim. Enjoy.

A moving average is an indicator that smooths out the bumpy chart you usually see. It works like this: You take the close prices of the last # days (e.x., 50) and average them. You then plot that number for each day. That’s a simple moving average. Exponential moving averages weight recent close prices more heavily.

Moving averages of different lengths can be used together to create more advanced indicators, which we will cover later.

– Michael