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Introduction to the Series
Who am I?
What is the purpose of this newsletter?
What is a stock and why should you care?
Who am I?
My name is Giuliano Mana, I’m 22 years old. I studied for a degree in Finance here in Argentina. I’ve been working as an advisor since late 2020 and I, with two colleagues, started a small fund in mid/late 2021. I’m the Portfolio Manager and head of research of such fund and we are planning on continuing it for several decades.
What is the purpose of this Newsletter?
The main reason for me doing this is because of how I started, how difficult it was. Although I studied for a B.A degree in Finance, the truth is that the distance from theory to practice is abysmal and nobody really makes one understand it. I had to attend University, read an infinity of articles, watch thousands of videos, read shareholder letters, fund letters, etc, to really begin to understand what the stock market concepts are, on a basis level. I’m definitely not complaining about the process, since I enjoy reading, but I think the learning curve could’ve been way shortened if there was a series of articles like the ones I’ll be writing.
Basically, this Newsletter will be about the Stock Market and all the intricacies about it. I’m sure many people don’t even know where or how to start since the market seems like a big monster, full of complexities, and It is. I’ve been there. That’s why I’m trying to write a more friendly approach to investing in stocks which will, at a later stage, derive in these complexities.
This will include everything, from “What is a Stock” to “How to Read a Financial Statement”, “How to Research Companies” … And, don’t be fooled, I’m not claiming to be the most knowledgeable person out there, I’m still reading the most I can to learn, but I know what it feels to be clueless about the Stock Market and I think I can help you get started and advanced in the subject. I made a LOT of mistakes in the past 2 years and I will do my best to make you avoid them: “A wise person is the one who not only learns from his mistakes, but who learns from other’s as well”
Very pretty but, what is a stock and why should I care?
When a business needs money to expand or maintain their operations, they have access to the capital markets. They can either emit debt or issue stocks through an Initial Public Offering. In this event, the company is offering a percentage of its business and its future profits in what it’s called a Primary Market since you deal with the company directly. Once past this, the issued stocks are tradeable in what it’s called the Secondary Market, the one on which 99% of people participate through buying or selling.
Therefore, “A stock (or equity) is a security that represents the ownership of a fraction of a corporation. This entitles the owner of the stock to a proportion of the corporation’s assets and profits equal to how much stock they own”. So, in essence, a stock is a piece of a business which concedes you the right to the same piece of what they own and produce. As it’s inherent nature of being a productive asset, it’s intrinsic value will theoretically be worth the present value of the future cash flows the stock will produce in the form of dividends.
The reason why you should care is the following:
Stocks are the best performing asset class of the past two centuries and it’s not even close. Of course history is just history and not always does it repeat itself, but, in my opinion, to achieve true wealth in the long run, stocks and its inherent volatility are a necessary evil.