Index Funds
Let's Know Things
Colin Wright
4.8 • 593 Ratings
🗓️ 21 January 2020
⏱️ 35 minutes
🧾️ Download transcript
Summary
This week we talk about securities, BlackRock, and the S&P 500.
We also discuss indices, mutual funds, and the Dow Jones Industrial Average.
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe
Transcript
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| 0:00.0 | In the world of finance, a security is an asset that can be traded, that can be bought and sold. And although the specific |
| 0:22.0 | definition is somewhat different depending on where you go and what specific component of the |
| 0:26.8 | finance world we're talking about, it almost always refers to equities, often including |
| 0:31.8 | equity warrants, and sometimes also encompasses things like state or company issued bonds. |
| 0:38.4 | In this context, equity is another word for stock, which means a share of a corporation. |
| 0:45.3 | If you buy stock in Apple or Coca-Cola, you're buying shares of those companies, and those shares |
| 0:51.5 | represent an incredibly small portion of the company in question. |
| 0:55.8 | An equity warrant is a type of security, which again is a type of viable and sellable asset, |
| 1:01.2 | that gives you the right to buy a particular stock at a fixed price up until a specific expiration |
| 1:07.3 | date. This is similar to, but distinct from, an option, which gives the holder of the |
| 1:13.0 | option, the right but not the obligation, to buy or sell a particular stock or bond, or some other |
| 1:19.2 | financial instrument, at a particular price before a specific date. The main difference between the two |
| 1:24.7 | being how they're issued, with an option coming from exchanges |
| 1:28.4 | and warrants being issued by the company in question. So Coca-Cola could issue warrants that give |
| 1:34.8 | investors the right to buy their stock at a particular price, but the New York Stock Exchange can |
| 1:40.8 | issue Coca-Cola stock options. Stocks and other sorts of securities are often bundled together into higher-level |
| 1:48.0 | tradable securities called derivatives, which take various shapes, but all of which are made |
| 1:53.0 | up of bundles of stocks or bonds or other such lower-level securities, and then either sold as a |
| 1:59.0 | new type of security or held internally by a financial |
| 2:02.3 | institution to hedge against risk or to speculate on price changes within a particular asset type, |
| 2:08.5 | which in practice means that you could buy individual stocks in a company like Facebook, |
| 2:13.5 | but then you'd be exposed to the risk that something will happen to Facebook in particular, |
... |
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