IEC UCSD

GBM #6

5/13/21
Overview
● Market overview
○ Major indexes/companies
○ Tesla/Bitcoin controversy
○ Inflation worries
● Answering your questions
● New stock acquisitions?
Market Overview
Tesla/Bitcoin controversy
● Tesla has suspended the ability to purchase their vehicles using bitcoin
○ They will however hold onto the bitcoin that they currently own
● This brings to light the environmental impact that data mining has and
● Many cryptos don’t use nearly as much energy to produce as Bitcoin which may
sway investors and companies, like Tesla, to focus on more sustainable cryptos
Inflation ● Inflation is the general rise in
price level of an economy
over time.
○ Currency is worth less
over time
● Gradual rise in inflation is
healthy for an economy.
● Inflation data showed that it
rapidly rose recently.
○ Fostered by significant
government investment
into the economy
○ Faster-than-expected
inflation scares
investors because it
means they need larger
returns than they were
expected to get the
return that they want
●
How to invest with a small amount of money?
● Fractional shares
○ Robinhood waitlist
● Use this to set up a well-structured portfolio that isn’t just penny stocks
○ But smaller companies are known to provide larger gains in the long run
● Use it to test out the markets and get a feel for investing
○ This way you will be more comfortable when you have larger amounts of money to invest
What is options trading?
● Calls and puts are a part of options trading
● Options trading is basically a way for investors to have the right to buy or
sell a stock at a certain price in a specified window
● The investor will pay a premium to have this option to either buy(a call
option) or sell(a put option)
● Examples:https://www.investopedia.com/options-basics-tutorial-4583012
● They are a good way to minimize your risk since you are not obligated to
buy or sell, only to pay the premium
How do shorts work? Put your legs in, zip them up

● Long - expect company to do well, and price to increase

● Short - expect company to fail, and price to decrease
● Borrow shares of a company on margin, and sell immediately,
hoping to buy it back at a lower price and returning those shares.
● Downside? Theoretically unlimited because a stock price can
increase to infinity and the short-seller has to buy it at that price
and return those shares.
● GME? Was heavily shorted as hedge funds saw it as a failing
business.
● Surprisingly did well around holiday season and people saw it as a
good investment and share price began increasing.
● Forced a lot of hedge funds to panic and start buying shares to cover
the amount they had to return which further pushed the price
higher.
● This is a short squeeze.
Dogecoin: Overhyped or Legit?
● As any other crypto there are higher amounts of volatility
● Since a DOGE coin block is mined every minute this meant a supply growth of
5.2 billion DOGE. Therefore with the current supply of 129 billion DOGE, this
implies an annual inflation rate of about 4%. So unlike Bitcoin, which is a cap
supply, the DOGE coin will have an inflation rate that will approach zero over
time. That’s an important point to get across.
● There are no other use cases, there are no smart contracts, so you can’t develop
DApps like you can on Ethereum and a host of other smart contract blockchains.
DOGE coin also cannot be considered as a store hold of wealth. That’s because
it has a ridiculously large supply, and the inflation schedule is still quite high.
What is a “good” stock and how do you determine
the right price for it?
● A “good” stock is a stock of a company that is projected to grow in valuation
over time
○ This generally means growing earnings and company expansion
■ Can be determined by looking at quarterly reports (refer to GBM #3 slide 5)
○ Established, large companies are “good” stocks because they are proven
● If you believe that a stock is good, then look at tools such as the P/E ratio to see
if it is currently overvalued
○ Do research, there are a lot of articles and websites that have analyses of large companies and
other “good” stocks
○ And ask us :)
New stocks?
● Tim bought some UWM shares
○ https://investorplace.com/2021/04/uwm-holdings-is-an-undervalued-gem-reddit-is-right/
○ Seen as heavily undervalued
○ largest wholesale mortgage lender in the United States (34% market share)
○ Recently hit all-time low
○ Hot housing market