How your money grows owning a Share? Money from Plant to Tree

Investing in shares is an alternative way to increase your wealth apart from other investments made in Gold, Real estate and etc.. Risks are evenly high in Stock market because of crashes (as we saw in the global financial crisis of 2008–2009), but if you’re patient, have assessed your risk carefully and have a diversified portfolio that performs well, your money plant will grow in to a tree. So what do you get owning a stock? Proud ownership of a company and you have an ownership stake in the corporation that issued it, or offered it for sale. The size of that stake depends on the number of shares you own compared to the total number available. Now lets see what are the ways though which your money grows.

DIVIDENDS

The company that issued the stock may pay a dividend which is a part of company’s profits. The company’s management may declare dividends either in between a financial year called interim dividends or at the end of the financial year called final dividends. However, it is not mandatory for the companies to pay dividends. It can use the profits for alternative uses like expansion. The decision to pay or not to pay dividends is taken at the annual meeting.

CAPITAL APPRECIATION

This is the main reason why people invest in shares. A stock's price may go up while you own it. If it does, you can sell some or all of your shares for a profit if you want to which is known as Capital gain, or you can hold onto it, which increases the value of your portfolio. Investing in stock has risks, though. You may have a negative return rather than a positive one. So you should properly access the risk of stock that you own. Remember, Shares need time to increase in value. With enough time and diversification (buying a range of shares spread across the economy), you’re unlikely to lose on the share market. If you’re impatient, and you’re not well diversified, you could lose money in shares.

BONUS SHARES

A bonus issue is an offer of free additional shares to existing shareholders. These new ew shares are issued to shareholders in proportion to their holdings. For ex: the company may give one bonus share for every 10 shares held.

SHARES CAN BE PLEDGED

Shares are considered as assets and hence, banks accept shares as security for loans. Apart from that, Brokerage firms allow you to borrow money from their account based on the current shareholding you have in your demat account. If you see an opportunity in markets, but don’t have the cash right now, you can adopt this route.

That’s how your money grows and one important factor that investments in stocks are preferred over investments in real assets or solid asset is because of HIGH LIQUIDITY Shares are highly liquid. You can receive your cash in two days. It can be converted into cash in no time. With online trading, all it takes is the click of button to sell you holdings.  

One philosophy you should remember before making any investment is “High returns always carry high risk”. Its simple equation High risk = High return . 

Why you should use Adjusted closing prices for Analysis

Beginners in analysis often do a basic mistake by considering the closing prices of stocks for analysis instead of Adjusted closing price. In this post I will explain, why you should use Adjusted closing price for any data analysis?

When you download data from internet you will often have a column Adjusted closing price in the file. You can read my post which explains how to download stock prices Method-1 and Method-2.

                                              

Closing price: It is the final price at which a security is traded on a selected trading day.

Adjusted closing price: It is a stock's closing price on any selected day of trading that has been amended to include any distributions (dividend) and corporate actions (Split/bonus shares) that occurred at any time prior to the next day's open.

From the above definition you can understand it could be a bias to use closing price for analysis which doesn’t discount the corporate actions or distributions. So it is always recommended to use Adj. Closing price during analysis.

Understanding Quant Finance - Investment Mathematics ebook (free download)

Investment Mathematics written by Andrew T. Adams, Philip M. Booth, David C. Bowie, Della S. Freeth provides an introductory analysis of investments from a quantitative viewpoint, drawing together many of the tools and techniques required by investment professionals. Using these techniques, the authors provide simple analyses of a number of securities including fixed interest bonds, equities, index-linked bonds, foreign currency and derivatives. The book concludes with coverage of other applications, including modern portfolio theory, portfolio performance measurement and stochastic investment models.

The content of the book starts from basics and at each chapters there is a annexure which is very helpful while reading the book. Definitely a good read to people who want o specialize themselves as a Quant finance specialist. This book give ample amount of knowledge. The book is available Available from: Andrew Adams since Jan 15, 2015 on Research Gate website. you can download the book here:  

Download here

ISBN: 978-0-471-99882-2

Table of Contents

Preface.

Acknowledgements.

PART I: SECURITY ANALYSIS.

Compound Interest.

Fixed-interest Bonds.

Equities and Real Estate.

Real Returns.

Index-linked Bonds.

Foreign Currency Investments.

Derivative Securties.

PART II: STATISTICS FOR INVESTMENT.

Describing Investment Data.

Modelling Investment Returns.

Estimating Parameters and Hypothesis Testing.

Measuring and Testing Comovements in Returns.

PART III: APPLICATIONS.

Modern Portfolio Theory and Asset Pricing.

Market Indices.

Portfolio Performance Measurement.

Bond Analysis.

Option Pricing Models.

Stochastic Investment Models.

Compound Interest Tables.

Student's t Distribution: Critical Points.

Areas in the Right-hand Tail of the Normal Distribution.

Index.

Tor browser not loading - [solved]

Tor browser allows you to browse the Internet anonymously. I have been using this since a year now and recently I faced the problem that the browser stuck while loading mostly on "loading authority certificates" and "loading network status". I did uninstalled reinstalled it couple of times nothing helped me and finally the solution was simple and I will be sharing the same here.

In my case it is my CMOS battery my battery isnt working and the clock of laptop resets every time I restart . So, what i did was just tuned the time and started the Tor and its in now in to deep web . So the solution is to checkout your clock time of your device. 

Simple way to download and export stock data using R - Method 3

you can read the method 1 here: http://www.iamsulthan.in/2016/04/step-by-step-tutorial-to-download.html If you have missed it.

In Security analysis and Portfolio management , the historical prices of a stock or indices is the base data for analysis in that case any researcher want to download and organize the data. Mostly they prefer to save the data in .csv file which is universally imported in any software. A difficulty or time consuming task for such researchers is to organize the data. for example: to check for any missing prices or to organize the closing prices in single worksheet for all companies in case of a multivariate analysis.

Using the following code you can download and export the data to .csv format which can be later used in any other data analysis softwares if you wish whereas R can do almost what other softwares do . It just need proper command to execute your research objectives.

How to download historical Share price - Method 1 using Yahoo Finance to Excel sheet

How to download historical share price automatically Method-2 Using Excel sheet

Github link for the code can be located here: download-historical-stock-data-in-R

Use the following code:

========================================================================

####Using quantmod####
####Single Stock data####
if(!require(quantmod)){install.packages("quantmod")}
getSymbols("WIPRO.NS", from="2015-01-01", to= Sys.Date())

#### multiple Stocks data Method-1 (each as seperate dataset) ####
getSymbols("WIPRO.NS;TCS.NS;INFY.NS", from="2015-01-01", to= Sys.Date())

#### multiple Stocks Method-2 (using list)####
stocklist <- c("WIPRO.NS","TCS.NS","INFY.NS","AAPL" )
getSymbols(stocklist, from="2015-01-01", to= Sys.Date())

####multiple Stocks Method-3####
stocklist <- c("WIPRO.NS","TCS.NS","INFY.NS","AAPL") # create list of stock tickers
Adjclose <- NULL
for (Ticker in stocklist)
  Adjclose <- cbind(Adjclose,getSymbols.yahoo(Ticker, from="2015-01-01", to= Sys.Date(), verbose=FALSE, auto.assign=FALSE)[,6]) #get data for companies in list, [,6] = keep the adjusted prices
FinalAdjclose <- na.locf(Adjclose) #copy last traded price in empty cell
FinalAdjclose1 <- Adjclose[apply(Adjclose,1,function(x) all(!is.na(x))),] #keep only dates having closing price
####Export the data to excel####
if(!require(timeSeries)){install.packages("timeSeries")}
data <- as.timeSeries(FinalAdjclose1)
write.csv(data, "data.csv")

========================================================================

Why R? Pros and Con

R is a open source programming software for statistical computing and graphics. You can download and install R in any platform either it may be Windows, Mac or Linux. the free and official download of the software can be done in the following link https://cran.r-project.org/ .

Installed R then its always recommended to use a IDE for R. there are few good IDE for R most of them are open source and you can find it at no cost. My best choice and I hope most agree with me that RStudio is the best IDE for R programming. you can download the RStudio using the link : https://www.rstudio.com/

Pros of using R:

1. Suits for statistical analysis: The environment in R is well suited for statistical analysis and it does handle big data quiet fast and ease.

2. open source and cross platforms: R is open source and do work in cross platforms. regardless of any OS whether it may be in Windows, Mac or Linux(debian, redhat, suse, ubuntu).

3. add-ons: This is the important reason that I recommend using R. researcher around the globe develop and distribute the packages in CRAN (Comprehensive R Archive Network). two useful websites where you find addons are here:

                                    Comprehensive R Archive Network                                   Crantastic

these networks grow very fast and The packages number are increasing day by day. 

4. Flexibility: Because R is programmed by users the package is very flexible and when you make use of the available scripts it will save you a huge time .

Con of using R

1.Minimal GUI: you cant simply say that R is completely command based. there are few GUI that makes analysis easy. (for ex: Rcmdr). people used to work with GUI will find it hard when the task is to be done in command based environment.

Over all I would say that for researchers who are interested in exploring the data will feel R as very helpful and It can help you to develop your ideas in to package and share it with CRAN which makes your research significant among the users. 

Tips on Night reading / to avoid strain in eyes

I read pdf daily it would be a Journal, Book, report , Encyclopedia and/or etc.., The problem I face while reading pdf in my laptop or tablet is that my eyes feels strain very soon after reading quite for sometime. The reason for this because of the white background in the pages of pdf file. So, here I got some tips to modify your settings in adobe reader which will help your eyes from getting strained. Follow the procedures below.

1. Default look of a pdf in Adobe reader

2. go to Edit> preferences 

3. In custom color by default the Page background will be White and Document Text will be Black

4. Change the page background to black and Document text to white

5. there u can see the change and its better now for yours eyes and you can keep reading for long time without strain on your eyes.

Note: after the change the images in the pdf may not look the same it may disappear because of setting and when you reset the settings you can have a look at images in pdf.