I'm putting a lot of detail into this blog so that Ryan can follow from home.
We started off by learning about what's going on around the world and how it impacts your portfolio. Emphasis was also on understanding the risk of buying stocks in volatile areas or buying stocks in companies which are investing in volatile areas.
We went through how Canadian stocks are impacted by what happens in USA, then also went through the world map talking about what is going on in different regions. For example, in the middle east we spoke about the issues with Saudi - Iran and the risks of investing there. We used the example of Qatar and how they airlifted cows from Netherlands to supply the country with milk. What happens to Dutch dairy stocks?
We then spoke about China, India, Pakistan and also the other Asian countries and how the economies are all intertwined.
We looked at OPEC. Every country needs oil to function and OPEC is the largest oil block. The class looked at where these countries are and discussed at length about what happens there (see blue countries below) . Without a safe supply of oil the lifestyle and workings of most countries is at risk - and this in turn impacts the stock market.
Venezuela: in a mess with 2 people claiming to be president and the country bankrupt because of bad management even though it was booming with money from oil only a few years ago. The class was urged to think about where the opportunity in investment is here?
Nigeria: Corruption, fighting between it's people and a vocal desire to leave OPEC so that they don't have to follow the rules. What is the impact to oil and other African countries? Which Canadian companies are impacted?
Saudi Arabia: Still in the news about the Kashoggi murder and public opinion and trust of the government at an all time low. The crown prince has waged a useless war with Yemen (look up where it is on the map) for no real strategic reason and which has cost the country a lot. The stock market here is completely corrupt. What are the risks of investing here?
Iraq: Still basically at war and no real functioning government. What's happening with the oil?
Iran: Highly functioning country with a very educated population. Unfortunately the leadership is corrupt and you never know who you are dealing with. Talks of Saudi and Iran threatening to go to war are more frequent these days. What does this mean to your portfolio and how does Huawei get involved in this?
So, as you can see, the major oil producing countries are all in an interesting stage which adds risk to the market in general.
We followed up on what was happening in the world and how it impacts our pockets.
Venezuela: Riots continued with Trump (and now Canada) showing support for one candidate. Oil supply is is disarray and potential refugee stream heading to US and Canada. What happens to our investments and again where is the opportunity to invest?
Iran Sanctions: The problem is sanctions only work when it is done by all. This was the case when sanctions were applied against South Africa - every country did it so the government was choke-hold and they had to abandon apartheid. With Iran, it's kind of half-hearted which is why it won't really work. And given that the leader lacks support from most of the people in the country it also makes it difficult to do.
South Africa: The discussions on Iran sanctions took us to South Africa since a couple of the kids had invested last semester in South African Gold. Kids are all urged to read the book by Nelson Mandela - A Long Walk to Freedom - as it will help them understand the political influences and the history of where money has been divided not only in South Africa but the whole of Africa. With Congo (the world's largest supplier of Lithium -used to power our phones) it helps to understand what is the underlying thinking when deciding long term to invest or do business in these countries.
Huawei: We spoke at length about what the arrest of Huawei's CFO means for the Canadian economy and the risk it puts on Canadian businesses overseas - and most importantly how that impact with the stock prices. If you were Canada, how would you get out of this mess? What would you do if you were the CEO of Huawei?
Venezuela: Continued the discussion of Venezuela with the class now looking at the two blocs which are gradually forming around the world at any hot spot. China-Iran-Russia vs USA. We spoke about the Cold War and tried to figure out what stocks would be doing well.
For homework, each student needs to find ONE stock in USA or CAN that is benefiting from the Venezuela crisis and tell me next week why it is doing well.
Brexit: We spoke about Brexit. Understanding what it is and the issues. We spoke about Financial Passporting for Banks where London Banks can sell products from any European Union country and how this was now going to be lost. We discussed business going over to Germany and Luxembourg and the impact of this on the economy. Finally, we discussed issues with the Brexit deal itself and particularly the problems with having a hard border with Ireland.
For homework, each student needs to find ONE stock that is benefiting from Brexit and tell me why next week it is doing well.
URGENT CALL: We have just launched our Instagram account. Share @Explorerhop Instagram and help us build it! Tell your parents and friends to follow us! Spread the word.
Mirabella: Lockheed Martin (Logic = Trump will likely start a war).
Mirabella: A Pub Company (Logic = People will be drinking a lot around Brexit).
We also covered some other regions.
d) CAD/ Venezuela Bolivar (You are looking for the Govt Rate and the Black Market Rate) You can find these on Google.
2) Come with ONE CHINESE Company you want to invest in and one Indian Company.
We start working on Ryan's spreadsheet next week.
We studied about China and the issues facing the economy. We compared Chinese Debt to that of USA and Canada. We also looked at some of the structural issues facing Chinese Debt and how the government is intervening. Finally, we discussed the pros and cons of this.
We looked at what is happening around the world and how it impacts the markets. The class also looked at Dividend rates of Chinese companies and saw how they offer way higher rates than most North American companies. This was followed by a good discussion about how these rates are justified and why companies offer higher rates.
We looked at how news in Asia (India-Pakistan hostilities) have an impact on stock markets all around the world. We followed the markets and tried to break down how these markets get impacted.
NOTE: NO CLASS FOR THE NEXT 2 SUNDAYS. March 10 and March 17. We will have one last class on March 25 and then the spring session will start.
EXAM: As requested by Athrun - there will be an Exam on March 25 to cover what we have done. :-) To prepare please follow the stock markets, make connection and READ THE NEWS.
We had an excellent exam session and the kids aced the test which I am completely overjoyed about.
Here is a list of questions that were asked. As you can see they are at a pretty advanced level.
Next semester will start in 3 weeks. I will send email this week with the details.