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Basics, Q4 Outlook and Investing Early

Updated: Oct 20

This week we have some very interesting articles and videos for our students! The first video is going to go back over some of the basics of finance to help everyone understand what they're really doing when they're investing. The video describes how a business can be viewed on an income statement, balance sheet, and statement of cash flows. What's important to realize about this is that most of the time, we won't be able to see the firm operating in person, therefore we will need to rely on their numbers to the extent that we trust their accounting firm. This video comes from William Ackman, the CEO of Pershing Square Capital Management. He's a pretty big name in the finance world and it's definitely worth giving this video a watch to understand the aforementioned characteristics of a company.


Our next recommended viewing is a Q4 2020 global market outlook. The video comes from a firm called Russell Investments. They're a large investment solutions player with around $300 billion of assets under management. Coronavirus has been one of the toughest challenges businesses have had to deal with, and this video does a good job at breaking down what things may look like within the near and medium term. One thing worth noting pertaining to the video is that this market of low inflation and zero/low interest rate growth is a climate that favors equities over bonds, so keep that in mind as you move forward in your investing and finance career. Especially with how hectic this year has been, keep in mind that we are in an election year. This means that there are larger political influences than normal in our markets, so be extremely cautious when it comes to investing around this time frame. We've already seen an astronomical rise in the price of gold, which is a good indicator that there is overwhelmingly nervous tensions from investors.


Finally, we'll link to an article that explains the 5 Common Mistakes Young Investors Make. This article breaks down the 5 worst things for investors at a young age can do. I think this article does a good job at helping us to see where blind spots in our mindset are. Many of you may read this article and see how the mistakes spill over to your classes, like procrastination and not asking enough questions. We are at a very early stage in our investing career, so it's important to approach our investments with the right mindset before we bet with our money. At the end of the day, young investors have an advantage in that they have a lot more time to make money than someone who starts when they're 30. Applying sound concepts and thinking through problems in your investment approach will lead you to not make repeated mistakes and allow you to retire comfortably.


Thanks for reading this week's newsletter! Please let me know if you have any suggestions for future posts. You can contact me within the Investment Division GroupMe, or send me an email @ ajz170001@utdallas.edu.


-Andrew

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