STOCK MARKET 26/NOV

Questions

1. What do you think about Bovespa? Did you enjoy the visit? Was its purposes clear for you?
2. What does a company have to do to enter the stock market?
3. What is an IPO?
4. What is a Stock Index? Give some examples and explain them. (ex. Dow Jones, IbrX-50)
5. What kinds of stock are there in Brazil?
6. What is the difference between “ações” and “opções”?
7. Why do stock prices go up or down?
8. What do you need to do to invest in stock?
9. Explain how the recent financial crisis affected the Ibovespa index.
10. What are some strategies used to decide how, where and when to invest?

Answers
 
1. Bovespa is working hard to develop into the world’s best stock exchange. It also does charitable work and has adapted various methods to attract females and other people so that they can invest. Their efforts to develop the companies and the country’s economy are also notable. The visit was very good and the presentation was very informative indeed. However, the purposes were vague to me, mainly because of my inability to understand the language.
2. Companies have to meet the requirements of the exchange in order to have their stocks and shares listed and traded there. Any business that wants to sell shares of stock to a number of different people does so by turning itself into a corporation. The process of turning a business into a corporation is called incorporating.
3. The Initial Public Offering (IPO) for a new public company is the first opportunity for the investing public to be able to purchase shares in the company. An IPO is a very exciting time for the company, and IPOs are often eagerly anticipated by the investing public as well. To have their shares traded on stock exchanges, companies had to go public.
The first procedure for the company to go public is to go with the application for company registration at the Securities Commission (CVM), which is the regulator and controller of the Brazilian capital market.
Only companies that get this record
may have their shares traded on the exchange.

4. A stock market index is the delineation of the relative value of stocks that make up a particular market sector such as heavy industry, technology, telecommunications, healthcare, etc. A stock market index is, therefore, composed of the combined performance of a certain aggregate of individual publicly-traded company stocks best representing that specific sector of the market. Standard and Poor’s 500 Index (S&P 500), which tracks large- and mid-cap U.S. stocks, is one of the better-known examples of a stock market index. Perhaps the most widely quoted stock index is the Dow Jones Index. MSCI World is another popular one.
5. Brazil Bank Stocks, Brazil Chemical Stocks, Brazil Energy Stocks, Brazil Food Stocks, Brazil Mineral & Metal Stocks, Brazil Paper Stocks, Brazil Telecom Stocks, Brazil Transportation Stocks, Brazil Utility Stocks. The best company shares are of PETROBRAS.
6. The opções market is intended to protect investors from volatility of stock prices. The opcoes market gives an option to automatically sell or buy shares after a particular period of time. Ações buys rights to buy or sell a stock at a certain time of exercise and pre-established price.
7. Stocks move in response to supply and demand. Each company authorizes a specifice number of shares that are issued for the company. As more people attempt to buy this stock the price increases. (If more people are attempting to sell, the price goes down. The company's financials, future prospects for profit and P/E ratio all play a part in whether there is a demand for the stock or not.
8. There are two ways to purchase stocks - investors can either use a brokerage, or buy their stocks through Direct Investment Plans or Dividend Reinvestment plans.
9. The most immediate and severe impacts of the global financial crisis in Brazil were felt in the currency. The selling movement dropped the Bovespa index by almost 60 per cent in the
period; and the – also panicking – buying operations of hard currency by Brazilian large, export corporations in
order to close hedge operations built to compensate for the until then long term Real appreciation. The global financial crisis and the effects commented above have hit a Brazilian economy in its most prosperous
moment in 30 years.


10. A person should invest in a diversified mix of stocks, bonds, and money market funds. A person buy a diversified portfolio of stocks as individual stocks are too risky. Most folks have a dificult time buying a properly balanced portfoilio of stocks on their own. They misbalance their portfolio by buying all small stocks or all growth stocks, or some other misbalanced assortment of stocks. Unless you know what you are doing, it is best to buy mutual funds. Vanguard.com, Fidelity, TIAA-CREF, and DFA are good sources. Buy no-load, low cost funds. If a person likes to invest part of your money aggressively in stock funds, and part conservatively in money market funds and bond funds. Vanguard.com has an on-line questionnaire which will give him an idea of how to do "Asset Allocation," determining how much to put in each type of fund.

If a company offers a 401K plan at work, the person should try to invest the most he can. The money grows tax free, and some companies will match his contribution. Investing in a mutual fund IRA is also a good idea. If he has children, he may want to consider a 529 plan or other college savings plan that grow tax free.

Index funds are also good because of their broad diversification, and the person is less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, its good to put~70-80% of your money in the Vanguard Total Stock Market Index Fund and ~20-30% in a foreign stock index fund. However, there are many different opinions out there on what the best mutual funds are.

If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments.

THE EMPEROR'S CLUB

25/Nov/09- Today, we were shown a movie named, The Emperor's Club. The movie is based on the life of a passionate “Classics” teacher, Mr. William Hundert, who gets a group of highly intellectual students in a batch where he encourages them to compete in a competition for The Emperor’s Club to become, "Mr. Julius Caesar". The students are enthusiastic about their class with Mr. William Hundert until Sedgewick Bell, the son of a Senator from the state of West Virginia, joins them. His rebellious tendencies provide a match to Hundert’s ways who fears his other students will succumb to the cocky ways of Sedgewick. He therefore, tries and successfully attains Bell’s attraction who eventually ends up 4th in the competition for The Emperor’s Club. The top 3 qualify for the finals and Hundert, in hope to encourage Sedgewick, changes his position to 3rd. Despite all the effort Hundert had put into Sedgewick, he finds him cheating in the finals, but due to the presence of Sedgewick’s father, he decides not to disqualify him. Sedgewick eventually loses and falls straight back into his repulsive, careless path by having bad grades and violating school rules to have relationships with girls on the other side of the school(not permitted to students). He gets his diploma and later turns out to be a successful man. On the 25th reunion, Hundert(who resigned from the school after he was denied to be the headmaster despite his glorious works), was invited by Sedgewick to conduct the competition for The Emperor’s Club again and all the students from that class were invited as well. After the respect and hospitality given to Hundert by Bell and other students, the competition progressed, Deepak (who won the tournament last time out) won it again after Hundert purposely asked a question not present in any history book to Sedgewick Bell, who was again caught cheating(he had a microphone inserted in his ear) by Huntler. After the end of the competition, Huntler confronts Sedgewick, and gets depressed to know that he had failed as a teacher. To his surprise, all his other students threw him a party in respect to what he had taught them. He realizes that he had to continue teaching and he returns to the St. Benedict's Academy.
In my opinion, the movie was a sensational piece of art to express an important message. The message of commitment and respect was continuously repeated throughout the novel. The movie also told that in order to succeed in life, one has to forget some of the failures and look towards the future. The movie also focuses on the fact that, some people might not respect you but you have to gain their respect by trying. Despite all that, the movie’s timeline could have been improved. The story’s end was a bit incomplete as we fail to know what happened to Sedgewick and his relationship with his son, Robert. All in all, the movie was very entertaining indeed.

TED TALKS

Chris Jordan pictures some shocking stats
24/Nov/09- We were shown four “TED Talks” videos in the classroom. All the four videos concerned current issues of importance. The order we were shown them was: "Are we in control of our decision?","Benjamin Wallace:Does happiness have a price tag?","Chris Jordan pictures some shocking stats!" and "A.J.Jacob: A year of living Biblically". The third video in particular, caught my attention.

I particularly enjoyed the video of Chris Jordan and his presentation of some startling statistics.
Mr. Jordan specifically presented facts to support the increasing deterioration in the American society. His stats were convincing enough to make people scratch their heads over issues regarding caffeine consumption, prisoners, cigarettes, prescribed drugs and plastic surgery (mainly breast implants). He was able to convince his viewers how the blame game won’t sort the problems but every person should be responsible for his/her own actions and how each and everyone of us could make a change.
When you hear a bad thing for a long period of time, it starts to look the right thing. Similarly, the use of prescription drugs and the consumption of coffee may seem right but they do have certain disadvantages on the long term basis. In my opinion the ever-increasing rate of breast implants is a frightful and alarming fact. It supports the fact that people have forgotten what’s right and what’s wrong. The deaths (1,110) per day due to cigarettes show how the society is devastating and with teenagers also in increasing numbers, adopting the woeful habit, things are not going to get any better. Its time for us to realize and take responsibility to ensure a better future where ¼ of the population has not gone to prison.

COCA-COLA

23/Nov/09- We left our school at 8 p.m and reached our destination, “The Coca Cola FESMA Factory”, in less than 1.5 hours. We were well received and were ushered to a room where we were to be presented. Our host was very informative and friendly. He presented a couple of videos and presentations regarding the history of Coca Cola and the current factory respectively. He took questions and was very excited about the prospect to smash all the myths regarding the company he worked for. After his precise introduction, we were offered beverages to refresh ourselves and then we were given radios to keep intouch with our host during the trip across the factory. Our trip started as we were shown the cleaning area (where the bottles and everything else were washed and cleaned). X-Ray sensors were used to ensure the cleanliness of the bottles. After that, we were shown how the production line for the Fanta cans, the Fanta bottles and the Coca Cola bottles. The cans observed a familiar pattern as empty topless cans entered in high numbers, only to be cleaned and then filled. They also passed through sensors to ensure that the production of the cans was not below the permitted amount(by the government). According to the factory (which happens to be the biggest Coca Cola factory in the world), it produces around 90,000 cans per hour. The bottles observed a little different pattern as they were recycled and cleaned to ultimate perfection (those which might have been dirty were seperated only to be cleaned again). The empty bottles then passed through the filler (it was being cooled down continuously by water), and the bottles were capped and full when they left it. The bottles were passed through sensors to ensure if the amount of soft-drink in the bottles was at the optimum level (not less than the amount printed on the bottle). According to our host, around 48,000 bottles were produced in an hour. After we were shown the process, we were asked to see the production in a less inslutated way. Not surprisingly, the cans were a cause to extra-ordinary noise pollution. The workers had to put insulated materials to protect their ears. After all they had shown us, we were taken back into the room where we were previously ushered into. We were shown some advertisements and commercials made by Coca Cola and were later given some souvenirs to remember the extra-ordinary field trip we had.

I thoroughly enjoyed the trip as it gave me an exposure to a completely new experience. A visit to the factory, made me realize the various processes a bottle or can of coke goes through before we actually use it. The hard work and commitment behind an organization was an eye opener and I was jubilated by the experience to the Coca-Cola FEMSA Company. The profound history of the company was something which I was unaware about and it was of immense importance in terms of global affairs. Although the presence of more students would have been better, the experience was extra-ordinary.