Let’s start with the usual calculations:
Let’s make a simple model, we will assume there is 10,000 units of each asset on a market at $1,000 per unit, and each asset has a market value of $10,000 – (10,000 / (market value) = $10). Let’s assume that the cost of each unit at $1 will be around $12, which is about 6.5 cents per unit.
To start, let us assume that you can create a stock that has a market cap of $10,000 as follows:
This model is very simple yet it has proven difficult to the majority of investors which are limited to the basic asset class. The problem is that a large majority of investors assume that you actually create a stock at a point at or less than $10k. This is not true as shown in the below chart which shows the performance of a given asset using different assumptions that can be made with the model.
I am not suggesting that you are going to be creating any huge wealth with your investment idea, although I do wish you to think about it more before you start doing it.
This simple model can be considered as a basic stock model, but it will be limited to a specific asset. For example, we do not need to consider the concept of the “value premium” in the asset type. We only need to ensure that the expected return per share of the asset that you create is greater than the expected return of other assets.
Why Should We Create Stocks?
The idea of creating a stock comes across as a silly thing that everyone should be doing. This is the fallacy that the majority of investors have been taught. However, it has been used as the foundation for stock investing for thousands of years, and the most successful investors are those that have mastered this concept of investing in the stocks.
The fundamentals of investing are based on this simple concept. I have no idea how many people have invested in the stock market, but if you have I can guarantee there have been many who have never heard of it, and still they are successful by creating a stock idea.
How Do We Do It?
We will do the following:
Estimated return from investment – If we assume that our investment is 1 million shares of the company X for a given yield of interest, the estimated returns will be the following:
Assuming that we have invested for
technitrader learning center, swing trading india, technical indicators for swing trading pdf, swing trading setup, best stocks to buy for swing trading