Understanding the World of Financial Markets

Start the course with one of the oldest forms of investment: property. Weigh the pros and cons of buying a home, not just as a residence but as an asset that will grow in value. Consider such strategies as purchasing rental properties versus REITs, “flipping,” and tapping home equity. Assess the return on holding a house for a decade or more compared with a similar investment in stocks.

Brand names, patents, secret formulas, logos—these and other entities are known as intangible assets, and they can add to a company’s value. This not only applies to prestige brands, but also to firms such as Walmart that are exceptionally well-run, which counts as an intangible asset. Keep this all-important concept in mind whenever you are gauging the strengths and weaknesses of a company.

CEO compensation can be shocking, but the millions paid to a top-notch chief executive can generate billions to the economy, not to mention a tidy return to stockholders. That’s why understanding a company’s CEO is as important as mastering its balance sheet. Study the starters and nonstarters among CEOs—and look at CEO types.

The futures market has a practical function of allowing a company to lock in a price for a vital commodity or asset to be used later, for example, natural gas. It also has a speculative side, enabling investors to hedge their portfolios against market downturns or to simply gamble on price fluctuations. Learn when it makes sense for an individual investor to venture into this risky market.