Project Notes: Project Title: Be Financially Secure: Predicting Auto Stock Prices with Past Data Name: Rutvik Parikh

Contents: Knowledge Gaps: 1

Literature Search Parameters: 3

Article #1 Notes: Does the use of technical & fundamental analysis improve stock choice? : A data mining approach applied to the Australian stock market 5

Article #2 Notes: Automatic Stock Trading System 9

Article #3 Notes: Method for Chart Markup and Annotation in Technical Analysis 11

Article #4 Notes: Introduction to Technical Analysis Price Patterns 13

Article #5 Notes: Moving Average (MA) 16

Article #6 Notes: Price Rate of Change Indicator (ROC) 18

Article #7 Notes: Money Flow Index - MFI Definition and Uses 21

Article #8 Notes: Relative Strength Index (RSI) 24

Article #9 Notes: Golden Cross vs. Death Cross: What’s the Difference? 27

Article #10 Notes: Oscillator 30

Article #11 Notes: Technical Analysis 32

Article #12 Notes: Beginners Guide to Technical Analysis 35

Article #13 Notes: Universal Behavior of Extreme Price Movements in Stock Markets 38

Article #14: Crossover 41

Article #15: Why are So Many People Afraid to Invest in the Stock Market? 44

Article #16: What Is the Stock Market and How Does It Work? 46

Article #17: Technical Indicator 49

Article #18: How Investing Works 51

Article #19: Don’t Let These Fears Stop You From Investing 54

Article #20: Risk-Free Return 57

Article #21: Risk Discount 59

Article #22: Treynor Index 61

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Knowledge Gaps:

This list provides a brief overview of the major knowledge gaps for this project, how they were resolved and where to find the information.

Knowledge Gap Resolved By Information is Date resolved located

Meaning and Reading articles Articles 4, 11, and 12 9/27/20 implementation of about the foundation technical analysis of technical analysis

How experiments Reading papers Articles 1 and 13 9/5/20 dealing with stock about past analysis are experiments performed centering around stocks

Technical Analysis Reading about the Articles 5, 6, 7, 8, 9, 11/20/20 Indicators indicators used to 10, 14, and 17 form predictions in technical analysis

Technical Analysis Reading articles and Articles 2 and 3 9/21/20 and Stock Patents applications concerning patents based around stock trading and technical analysis

General Investing Reading articles Articles 16 and 18 12/6/20 and Stock Market about the general Information procedure of investing, how the stock market works, and some basic strategies used by investors

Fear of Investing Reading articles Articles 15 and 19 12/13/20 about why individuals are scared of investing and how this fear is harmful to these individuals

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Investment Risk Reading articles Articles 20, 21, and 12/20/20 about risk-free 22 investments and about how investors deal with investment risk

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Literature Search Parameters:

These searches were performed between 7/10/2020 and 12/20/2020. List of keywords and databases used during this project.

Database/search engine Keywords Summary of search

Investopedia “Technical Analysis I found several articles Indicators” discussing different patterns and indicators used in technical analysis

IEEE Xplore “Stock Technical Analysis” I found a paper outlining an experiment that was performed to test if technical and fundamental analysis are effective tools

Fidelity “Technical Analysis Basics” I found an introductory article that went over technical analysis and several data representations

Boston Public Library “Stock Price Movements” I found an article about an experiment focusing on the shape of return distributions

Google “Technical Analysis I found a publication outlining Publications” the history and evolution of technical analysis; this publication also discussed how technical analysis is presently applied

Investopedia “Investment Risk” I found articles about the impact of risk on investing and how investors deal with investment risk

Google “Investing and the Stock I found general articles Market” outlining how individuals should go about investing and articles describing important characteristics of the stock market

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Google “Investing Fear” I found articles that describe the reasons why people are scared of investing and how these reasons are actually not valid

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Article #1 Notes: Does the use of technical & fundamental analysis improve stock choice? : A data mining approach applied to the Australian stock market

Article notes should be on separate sheets

Source Title “Does the use of technical & fundamental analysis improve stock choice? : A data mining approach applied to the Australian stock market”

Source citation (APA C. Hargreaves, & Y. Hao. (2012). Does the use of technical & Format) fundamental analysis improve stock choice? : A data mining

approach applied to the Australian stock market. 2012 International Conference on Statistics in Science, Business

and Engineering (ICSSBE), 1–6.

Original URL https://ieeexplore-ieee-org.ezpxy-web-p-u01.wpi.edu/document/6396 537/authors#authors

Source type Professional Publication

Keywords “Data mining,” “stock prediction,” “index,” “decision tree,” “neural network,” “sector”

Summary of key This paper strives to answer one overarching question: Can points (include fundamental and technical analysis - the analysis of graphs and past methodology) stock trends - genuinely improve stock choice? Many companies and individual investors try to use available data to make wise financial decisions. However, two main problems are getting in the way of these attempts: the surplus of stocks in the market and the large quantity of information accessible through various platforms. Furthermore, there have not been many prior studies on the application of data mining techniques to fundamental and technical information. This paper utilizes such information alongside data mining methods to build a foundation that makes class forecasts

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about the performance of industrial stock companies possible. Ultimately, this paper could affect many investors’ techniques and decisions by testing whether or not the Australian stock market will be outperformed by stocks chosen through data mining and personal methodical methods. To narrow down the great number of possible stocks to purchase, the best performing sector was selected as the focus for this study. This sector ended up being the industrial sector, and data was obtained on 200 stocks from this sector. In order to determine which stocks should be chosen from the available industrial ones, four strategies were employed: one based on a personal method, two based on decision trees, and one based on neural networks. The personal method used weights and rankings to establish a final score for each stock. Similar to how a college admissions team might check each applicant with certain rules such as GPA > 3.5 and SAT > 1400, the decision trees in this study contained financial rules at each step to locate strong relationships between entries passed into the tree and target values. One of the decision trees in this study prioritized a high likelihood of a price increase in a stock while the other prioritized a high growth of a stock in the current year when selecting stocks. Lastly, neural network models can illustrate the non-linear relationship present among financial data, and the strategy based on neural networks in this study prioritized a high chance of a price increase when choosing stocks to buy. In addition, in an effort to cut down all possible stocks to a select few, a trading strategy based on technical and fundamental analysis was utilized. The results of this study indicate that data mining models, which included the decision trees and the neural network model, all performed very well. Furthermore, based on the portfolio results, it may be stated that the Australian stock market is outperformed both by stocks selected through a personal approach and stocks selected through a data mining approach. However, slight alterations to data can result in huge alterations to decision trees. In addition, this study only focused on the industrial sector; future research should try these techniques on different sectors. Overall, this paper establishes that the use of data mining methods for stock prediction purposes is justified. This result may have massive consequences on the approach used by investors not only in Australia but also around the world.

Research Can technical and fundamental analysis genuinely improve stock Question/Problem/Ne choice? ed

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Important Figures - Trading Technique:

- Results of Decision Trees and Neural Network:

Notes - Not much research done on the application of data mining techniques to fundamental and technical information - The paper uses this information, along with data mining methods, to build a foundation allowing class forecasts about the performance of industrial stock companies - The results indicate that data mining is fruitful in making predictions - Many companies and individual investors are trying to use available data to make wise financial decisions - The surplus of stocks in the market and the large quantity of information accessible through various platforms pose a problem for those looking to make these wise choices - This paper tests if the Australian stock market will be outperformed by the stocks chosen through data mining and personal methodical methods - Used decision trees and neural networks to figure out if a stock should be purchased or not - Decision trees contain different rules (financial rules in this case) to locate strong relationships between values that are passed into the tree and target values - Neural networks can illustrate the non-linear relationship among financial data - To narrow down the number of possible stocks to choose from, the best performing sector was identified

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- This sector was the industrial sector, and data was obtained on 200 industrial stocks - In this study, there were four strategies used to determine which stocks to buy: one based on a personal method (which assigned weights and rankings to each stock to compute a final score), two based on decision trees (which prioritized a high likelihood of a price increase and a high growth in the current year, respectively), and one based on neural networks (which prioritized a good chance of a price increase) - A trading strategy based on technical and fundamental analysis was used to cut all possible stocks down to a select few - The results indicate that the data mining models (decision trees and neural network models) all performed well with high reliability and a sensitivity of 92% - It can be stated, based on the portfolio results, that the Australian stock market is outperformed by stocks selected through a personal approach and a data mining approach (the hypothesis is confirmed) - Some limitations of this study are that slight changes in data can lead to huge changes in decision trees and that the strategies explored in this paper are restricted to the industrial sector - These findings conclude that using data mining methods for stock prediction purposes is justified - Further research should try these methods on a different sector

Cited references to Rupesh A. Kamble, "Short and long term stock trend prediction follow up on using decision tree", Intelligent Computing and Control Systems (ICICCS) 2017 International Conference on, pp. 1371-1375, 2017.

Chang Liu, Hafiz Malik, "A new investment strategy based on data mining and Neural Networks", Neural Networks (IJCNN) 2014 International Joint Conference on, pp. 3094-3099, 2014. Follow up Questions 1. Can these approaches be used in other parts of the world and still produce similar results? 2. How should the measures of sensitivity and specificity be interpreted differently? 3. How were the financial criteria used in the personal approach selected? 4. Why would the neural network model perform better with a larger dataset?

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Article #2 Notes: Automatic Stock Trading System

Article notes should be on separate sheets

Source Title “Automatic Stock Trading System”

Source citation (APA Jr, C. C. F. (2003). Automatic stock trading system (United States Format) Patent No. US6594643B1).

https://patents.google.com/patent/US6594643B1/en

Patent Number: US 6,594,643 B1

Original URL https://patents.google.com/patent/US6594643B1/en

Source type Patent Application Article

Keywords Exchange, e.g. stocks, commodities, derivatives or currency exchange

Summary of key This patent application is in reference to a system that automatically points (include trades stocks. In addition to stocks, this system may also trade methodology) bonds, metals, and other items. This system consists of a data interface which can receive data through a communication link and analyze it based on if an investment fits certain parameters, an input unit such as a keyboard, an individual computer, and a trading interface. If these parameters considered by the data interface are met, the system releases a trade request signal. Not only is this system completely automated meaning it can independently trade for long periods of time, but also it eliminates slight criteria discrepancies and errors caused by humans. This could allow individuals to trade stocks more efficiently and wisely to be more successful in the market.

Research This innovation addresses the need for a system that automatically Question/Problem/ executes a trade by receiving and analyzing investment data (with Need pre-inputted criteria) and sending trader or exchange a request for a trade.

Important Figures Figure 1 is a labelled outline of the system and its components

Notes - The investment items to be traded can be stocks, bonds, options, contracts, metals, real estate, etc. - System includes data interface for receiving and analyzing

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investment data to see if investment fits the parameters of predetermined conditions. - If investment fits the parameters, system sends out a trade request signal - Pros: Fully automated system, traders can allow it to run and make trades independently for extended periods of time - Needs addressed: discipline (very difficult to match the exact criteria for a trade when trading manually) and human error (system is able to maintain a close watch on market data when humans are unable to) - 4 components of the system: data interface (able to interact with several different data sources), input unit, individual trading computer (publicly available, open architecture), trading interface - Investment data is transmitted to trading interface via a communication link (via cable airway) - Data can include price, CPI, interest rate, commodity price, and any other relevant investment data - Input unit can be a keyboard, modem, disk drive, etc.

Cited references to follow up on

Follow up Questions 1. How has this system affected day-to-day trade in the stock market? 2. Which inventions have appeared in this area since this one? 3. How is this system currently used? 4. Has this system been adopted by brokerage firms?

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Article #3 Notes: Method for Chart Markup and Annotation in Technical Analysis

Article notes should be on separate sheets

Source Title “Method for Chart Markup and Annotation in Technical Analysis”

Source citation (APA Escher, R. E. A. (2004). Method for chart markup and Format) annotation in technical analysis (United States Patent No. US6801201B2).

https://patents.google.com/patent/US6801201B2/en?q=Tech

nical+Analysis+Stocks&oq=Technical+Analysis+Stocks

Patent Number: US 6,801,201 B2

Original URL https://patents.google.com/patent/US6801201B2/en?q=Technic

al+Analysis+Stocks&oq=Technical+Analysis+Stocks

Source type Patent Application Article

Keywords Technical analysis algorithms, information processing using digital simulations

Summary of key This patent is in reference to a method for annotating a time series points (include chart (with pivot points) to display patterns. The time series chart is methodology) generic in nature; it can represent any type of data for which the independent variable is time. For the purpose of this research, a time series of financial data is concentrated on. This method allows for efficient analysis of and pattern recognition within historical stock market data, so that investors can extrapolate insights about future market performance and act accordingly to ultimately be successful in the stock market. Graphs of financial time series sometimes exhibit specific patterns or formations before moving in a particular direction. As such, it is to an investor’s benefit to be able to detect such formations when they occur, so that he or she can react appropriately. At the time of this patent application, there existed no way to automatically outline the results of formation

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detection within a financial time series chart. An investor can submit a request for marking up financial time series data in relation to a given market event. The investor must also select the features related to the market event that are most relevant to him or her. The system uses mark-up tags to annotate the key patterns in the data that relate to the market event and the investor’s identified features. In generating these mark-up tags, the system uses a complex range of mathematical tools (calculus and geometric patterns). The system is able to produce output in a variety of formats (Excel, HTML, etc.).

Research This innovation addresses the need of investors to identify key pivot Question/Problem/ points and turning points in a time series chart. Need

Important Figures Figure 2 is an example of a time series graph that is annotated by this system

Notes - Describes an innovation that discovers patterns in any time series data - Stock data is the focus in this research - Efficient analysis and pattern recognition allow investors to benefit since they may have a good sense of what the future market holds and can act as such - No way to automate the results of pattern detection at this time - Investors submit requests for certain time series data regarding the features of the stock market that are most relevant to them to be annotated - System utilizes mark-up tags to annotate the key points of the data based on the investor’s request - Complex mathematical tools are used to generate these mark-up tags, and they system outputs in a variety of formats

Cited references to follow up on

Follow up Questions 1. How has this system evolved over time? 2. Is this system available to individual investors, or only to larger companies? 3. Which algorithms are used to create the markup tags?

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Article #4 Notes: Introduction to Technical Analysis Price Patterns

Article notes should be on separate sheets

Source Title “Introduction to Technical Analysis Price Patterns”

Source citation (APA Hayes, A. (2020). Introduction to Technical Analysis Price Format) Patterns. Investopedia. Retrieved from https://www.investopedia.com/articles/technical/112601.asp

Original URL https://www.investopedia.com/articles/technical/112601.asp

Source type Scientific Research Article

Keywords “Patterns,” “trendlines,” “continuation pattern,” “reversal pattern,” “volume”

Summary of key A significant component of identifying price patterns are points (include trendlines. Trendlines are straight lines that typically connect the methodology) peaks and troughs of closing prices. There are two main types of trendlines: up trendlines and down trendlines. Up trendlines have positive slopes and indicate support levels while down trendlines have negative slopes and indicate resistance levels. Continuation patterns are created when a significant trend halts for a short period of time only to resume. Three common types of continuation patterns are pennants, flags, and wedges. Pennants consist of two trendlines, one up and one down, that eventually meet. On the other hand, flags consist of two parallel trendlines that indicate the overall direction of the market. Finally, wedges contain two trendlines moving in the same direction that eventually come together and help in assessing the market’s overall direction. Reversal patterns highlight a change in the market’s overall direction; they consist of a trend pausing and then reversing its direction. Head and shoulders, double tops, and double bottoms are three examples. Head and shoulders patterns may develop at the top or bottom of the market in three stages, with each stage forming a larger head or trough than the previous. Also, double tops and double bottoms are when the market cannot break

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resistance and support levels twice, respectively. These patterns forecast a trend reversal. These patterns are practical measures that can greatly assist investors in predicting the market and making wise decisions.

Research What are continuation and reversal patterns, and how do trendlines Question/Problem/ play a role in each? Need

Important Figures - Continuation Pattern

- - Reversal Pattern

Notes - Trendlines or curves are used to identify price patterns - Price patterns are used to predict future price movements in technical analysis - Straight lines connecting peaks or troughs are known as trendlines - Up trendlines have positive slope, are formed when a stock’s prices keep rising, and indicate support levels - Down trendlines have negative slope, appear when a stock’s prices continuously decrease, and indicate resistance levels - Closing prices (and not opening, high, or low prices) are frequently used as the points that trendlines connect since they are a good representation of an individual’s willingness to hold onto a stock - A sideways market is present when prices are enclosed within two trendlines in an oscillating behavior - A continuation pattern is created when a significant trend stops for a short period of time and then continues with the

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same trend - Common continuation patterns: pennants, flags, wedges - Pennants include two trendlines, one up and one down, that eventually come together - Flags include two parallel trendlines; generally, if these are up trendlines, there is a break in a market that is facing down, and if these are down trendlines, the overall trend of the market is up-facing - Wedges consist of two trendlines moving in the same direction that eventually come together; down-angled and up-angled wedges reveal overall market trends of up and down respectively - Triangles foreshadow breakouts and breakdowns and include symmetrical triangles, ascending triangles, and descending triangles - The Cup and Handle pattern marks the pause of an upward trend that will then continue to even higher figures once the pattern is over - Reversal patterns highlight a change in market direction; similar to a continuation pattern, a trend pauses, but it then reverses its direction - Three types of common reversal patterns include head and shoulders, double tops, and double bottoms - Head and shoulders patterns may develop at the top or bottom of the market through three pushes, with each push forming a larger head or trough - Double tops occur when when the market fails to break resistance levels twice and double bottoms when the market fails to break support levels twice; both frequently lead to a trend reversal - Gaps are present when a price greatly changes, leading to an empty area between two trading periods - Continuation and reversal patterns often come with a decrease in volume, but this increases as soon as the pauses are over

Cited references to TD Ameritrade. "Identifying Continuation Patterns with Candlestick follow up on Charts., https://tickertape.tdameritrade.com/trading/candlestick-chart-continua tion-patterns-15611” Accessed Nov. 14, 2019. Follow up Questions 1. How often do the patterns described in this article hold true? 2. How is the figure in the “Wedges” section an example of a wedge and not a pennant? 3. Do trendlines always have significance?

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Article #5 Notes: Moving Average (MA)

Article notes should be on separate sheets

Source Title “Moving Average (MA)”

Source citation (APA Hayes, A. (2020). Moving Average (MA). Investopedia. Format) Retrieved from

https://www.investopedia.com/terms/m/movingaverage.asp

Original URL https://www.investopedia.com/terms/m/movingaverage.asp

Source type Scientific Research Article

Keywords “Moving average,” “simple moving average,” “exponential moving average,” “time frame”

Summary of key A moving average is an important indicator used in technical analysis points (include to provide an average that does not lose value due to short-term methodology) price deviations. Investors can choose what time frame they would like to observe an average from; while shorter time frames are typically more influenced by alterations in price and are more useful for short-term investors, long-term investors may benefit the most from selecting a longer time frame. Either way, experimenting with many time frames is the best way to select one to examine. Additionally, there are two types of moving averages: simple moving averages and exponential moving averages. Simple moving averages take the arithmetic mean of a set of prices, but exponential moving averages place more value on recent prices to become more receptive to new data. Many individuals prefer the openness to new data offered by exponential moving averages over equally weighted simple moving averages. Regardless of which type one opts for, moving averages are very helpful in making predictions; ascending moving averages foreshadow uptrends and falling moving averages relate to downtrends in prices. Also, crossovers reveal momentum in a particular direction. Many investors can rely on moving averages to assist them in making decisions relating to their portfolio.

Research How are moving averages used as an important indicator in the field Question/Problem/ of technical analysis? Need

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Important Figures N/A (The article did not have figures relating to the content)

Notes - Used in technical analysis to have a recent average that is not influenced greatly by short-term deviations - Lag is increased by longer time frames for moving averages - Investors can choose to use moving averages in whatever way they want by choosing their time frame - Shorter time frames will be more influenced by changes in price and are more geared toward short-term investors; long-term investors may benefit more from longer time periods - Experimenting with several time periods is the best way to choose which time period to consider - Ascending moving averages indicate uptrends while falling moving averages relate to downtrends; crossovers reveal momentum in a specific direction - Other indicators are impacted by moving averages, such as the moving average convergence divergence (MACD) - Simple moving averages simply take the arithmetic mean of a set of prices - Exponential moving averages value recent prices more to become more open to new data - Many individuals prefer exponential moving averages since they allow for a better understanding of recent movements

Cited references to No references are listed, but other relating articles that may be useful follow up on to me are provided: https://www.investopedia.com/terms/m/macd.asp https://www.investopedia.com/terms/b/bollingerbands.asp

Follow up Questions 1. When might a simple moving average be a better choice than an exponential moving average? 2. Are there any other indicators that are also not affected by short-term variations in prices? 3. Where do moving averages stand in terms of effectiveness and accuracy compared to other indicators?

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Article #6 Notes: Price Rate of Change Indicator (ROC)

Article notes should be on separate sheets

Source Title “Price Rate of Change Indicator (ROC)”

Source citation (APA Mitchell, C. (2020). Price Rate Of Change Indicator—ROC. Format) Investopedia. Retrieved from

https://www.investopedia.com/terms/p/pricerateofchange.as

Original URL https://www.investopedia.com/terms/p/pricerateofchange.asp

Source type Scientific Research Article

Keywords “ROC,” “momentum,” “divergence,” “reversal”

Summary of key The rate of change (ROC) momentum indicator finds the percentage points (include difference between a current price and that same price a particular methodology) number of periods or years ago. Its value becomes more evident when compared to 0; positive ROC values highlight uptrends while negative ROC values characterize downtrends. ROC values that cross zero provide a strong chance of a trend change. Divergence, the term for when ROC values and prices are going in opposite directions, also provides evidence of a trend change. Furthermore, increasing values in either direction illustrate increasing momentum, and values moving toward 0 serve as an example of decreasing momentum. Similar to how investors select time frames to consider when using moving averages, investors may decide the number of periods to go back, called the n value, for the ROC indicator. Smaller n values are quicker at reacting to changes, but are vulnerable to inaccurate signals; larger n values respond more slowly, but often supply more meaningful information. Although ROC values can provide investors with lots of significant information, they bring some drawbacks. By weighing past prices and current prices equally, the ROC indicator goes against a belief of many investors. Also, this indicator can be difficult to rely solely on. Nonetheless, the ROC

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indicator can offer substantial information to help make financial decisions, especially when combined with other indicators.

Research What is the rate of change indicator and how is it used in technical Question/Problem/ analysis? Need

Important Figures - Sample ROC Graph:

Notes - Is a momentum indicator that computes the percentage difference between a current price and that price a particular number of periods ago - Compared to zero; positive values show uptrends while negative values reveal downtrends - Increasing values in either direction illustrate increasing momentum while values moving toward 0 illustrate decreasing momentum - ROC = ((most recent closing price - closing price from a former period) / (closing price from a former period)) * 100 - Similar to choosing time frames for moving averages, investors may choose how many periods they wish to go back, called the n value, and compare current figures to - Smaller n values are quicker at reacting to changes, but are also vulnerable to inaccurate signals - Larger n values are slower at responding to changes, but typically provide more meaningful information - If the ROC crosses zero, there is a good chance of a trend change; this can occur sooner with a small n value - ROC values may also signal price reversals and can help investors determine when to trade - ROC can also indicate trend changes through divergence, which is when ROC values and prices are progressing in opposite directions - An issue with ROC is that it weighs past prices and recent

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prices equally which may not always be helpful - ROC can be difficult to rely on by itself, but when paired with other indicators, it can help predict price changes

Cited references to No references are listed, but other relating articles that may be useful follow up on to me are provided: https://www.investopedia.com/terms/s/stochasticoscillator.asp https://www.investopedia.com/articles/technical/02/091002.asp

Follow up Questions 1. What other indicators are ROC typically used with? 2. How accurate is ROC by itself in regard to predicting trend changes? 3. What might be a good n value to obtain quick reactions while avoiding as much inaccurate information as possible?

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Article #7 Notes: Money Flow Index - MFI Definition and Uses

Article notes should be on separate sheets

Source Title “Money Flow Index - MFI Definition and Uses”

Source citation (APA Mitchell, C. (2020). Money Flow Index—MFI Definition and Format) Uses. Investopedia. Retrieved from https://www.investopedia.com/terms/m/mfi.asp

Original URL https://www.investopedia.com/terms/m/mfi.asp

Source type Scientific Research Article

Keywords “Money flow index,” “divergence,” “volume,” “money flow ratio,” “raw money flow,” “typical price”

Summary of key Money Flow Index (MFI) is a technical analysis indicator that points (include recognizes overbought and oversold signals in assets with the help methodology) of price and volume data. MFI values range from 0 to 100, with numbers above 80 representing overbought stocks and numbers below 20 relating to oversold stocks. MFI values can be calculated using a single formula: 100 - (100/(1+Money flow ratio)). The quantity of money flow ratio can be found by dividing the positive money flow within the past 14 periods by the negative money flow during the same time frame. Furthermore, stocks’ normal price and volume determine raw money flow, which is positive when prices increase between adjacent periods and negative when prices decrease from one period to the next. When MFI values and data of actual prices are moving in opposite directions, a pattern reversal is possible. Additionally, MFI values that rise from below ten to above ten prompt a long trade while short trades are prompted by a decrease in MFI values from above 90 to below 90. However, the MFI indicator does come with some drawbacks; for example, it can predict incorrectly, which could cause investors to make poor decisions. Additionally, the MFI indicator could simply not predict a future event, so relying solely on it may not be helpful to investors. Nevertheless, the MFI indicator can assist investors in making important portfolio decisions that could

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pave the way for investment success.

Research How do investors use the money flow index indicator to make Question/Problem/ financial choices? Need

Important Figures - Money Flow Index Graph:

Notes - Indicator that recognizes overbought and oversold signals in assets and discerns trend alterations by using both price and volume data - Ranges from 0 to 100 - MFI values above 80 highlight that a stock was overbought while MFI values below 20 relate to an oversold stock - Formula to calculate: 100 - (100/(1+Money flow ratio)) - Money flow ratio divides positive money flow within the past 14 time periods by the negative money flow during that same time period - Raw money flow is based on stocks’ normal price and volume during 14 periods of data and takes on a positive value when prices increase from one period to the next and a negative value when prices decrease between periods - MFI values and actual price data moving in opposite directions indicates a possible pattern reversal - MFI values that become higher than 10 prompt a long trade while MFL values that fall below 90 prompt a short trade - Unfortunately, the MFI indicator can predict false events which could potentially reduce in poor decisions - The MFI indicator may also not predict a future occurrence, so relying solely on it is not a wise idea

Cited references to No references are listed, but other relating articles that may be useful follow up on to me are provided: https://www.investopedia.com/terms/m/moneyflow.asp

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https://www.investopedia.com/ask/answers/071414/whats-difference- between-chaikin-money-flow-cmf-and-money-flow-index-mfi.asp

Follow up Questions 1. Why do other indicators fail to take stocks’ volume into account? 2. What length of time is frequently used for each period when computing MFI values? 3. How often is the MFI indicator inaccurate?

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Article #8 Notes: Relative Strength Index (RSI)

Article notes should be on separate sheets

Source Title “Relative Strength Index (RSI)”

Source citation (APA Chen, J. (2020). Relative Strength Index (RSI). Investopedia. Format) Retrieved from

https://www.investopedia.com/terms/r/rsi.asp

Original URL https://www.investopedia.com/terms/r/rsi.asp

Source type Scientific Research Article

Keywords “RSI,” “divergence,” “overbought,” “oversold,” “bullish,” “bearish”

Summary of key RSI, or relative strength index, is a momentum indicator used in points (include technical analysis that uses recent price change data to determine if methodology) a stock has been overbought or oversold. RSI values fall in between 0 and 100, with 70 and above revealing that a stock is overbought and 30 or below demonstrating that a stock is oversold. RSI values can be calculated using a two-step formula that requires taking note of the average gain and the average loss from the past 14 periods. In addition, RSI values in the oversold and overbought range often correspond to stocks experiencing a downtrend or uptrend, respectively. Furthermore, bullish divergences occur when RSI values fall into the oversold territory and then proceed to form a higher low that corresponds with downtrends in prices. These bullish divergences foreshadow prices rising and forming a bull market; bearish divergences follow this same concept but in the exact opposite direction. Moreover, RSI swing rejections follow a similar pattern as divergences with prices eventually rising or falling after reaching multiple lows or highs in bullish and bearish instances, respectively. Although RSI values can influence investors’ decisions, they can also end up as false signals. This is why these values should be confirmed with other trends or techniques prior to greatly impacting a choice.

Research What is relative strength index and how does it contribute to Question/Problem/ technical analysis? Need

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Important Figures - RSI Divergence:

- - RSI Swing Rejection:

Notes - The relative strength index (RSI) is a momentum indicator that takes recent price change data into account to determine if a stock has been overbought or oversold - RSI values range from 0 to 100; 70 or above reveals that a stock is overbought and 30 or below demonstrates that a stock is oversold - Two step formula to calculate RSI values; formula normally involves examining average gain and average loss from the past 14 periods - RSI increases as the quantity and magnitude of positive closing prices increase and vice versa - RSI values will only be very close to the extremes of the range if a market is experiencing a very strong trend - Stocks experiencing an uptrend or a downtrend will often have RSI values in the overbought and oversold territories respectively - It is vital to confirm RSI’s message with trends in stock prices themselves or pertinent techniques to avoid false signals

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- A bullish divergence is created when an RSI value falls into the oversold territory and then experiences a higher low that matches downtrends in prices; this foreshadows rising prices and a bull market - Bearish divergences follow this same pattern in the opposite direction - RSI bullish swing rejections form when RSI values fall into the oversold category, rise back above 30, fall again without going below 30, and finally rise above the latest high - Bearish swing rejections follow the same criteria but move in the opposite direction - Signals can be trusted the most when they agree with long-term trends - RSI can have false positives and false negatives, but is of most use in a market that is shifting between bullish and bearish movements

Cited references to Constance Brown. "Technical Analysis for the Trading Professional," follow up on Page 13. Accessed August 14, 2020.

Follow up Questions 1. How do other indicators incorporate RSI? 2. How does RSI compare to other indicators in terms of accuracy rate? 3. Is RSI more suitable for short-term investors or long-term investors?

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Article #9 Notes: Golden Cross vs. Death Cross: What’s the Difference?

Article notes should be on separate sheets

Source Title “Golden Cross vs. Death Cross: What’s the Difference?”

Source citation (APA Investopedia. (2020). Golden Cross vs. Death Cross: What’s the Format) Difference? Investopedia. Retrieved from https://www.investopedia.com/ask/answers/121114/what-dif

ference-between-golden-cross-and-death-cross-pattern.asp

Original URL https://www.investopedia.com/ask/answers/121114/what-difference- between-golden-cross-and-death-cross-pattern.asp

Source type Scientific Research Article

Keywords “Golden cross,” “death cross,” “moving average”

Summary of key Golden crosses and death crosses, two significant tools used in points (include technical analysis, both include the intersection of a short-term methodology) moving average and a long-term moving average. However, they are extremely different in nature. Golden crosses contain a forward-moving bull market while death crosses maintain a bear market. Furthermore, golden crosses are initiated with a downtrend. This downtrend then becomes an uptrend where the intersection of the two different moving averages occurs. Finally, the market often continues upward from this point of intersection. On the other hand, death crosses follow the same exact procedure in the opposite direction. Finally, different investors may use different time intervals for their short-term and long-term moving averages, but both types of crosses have a direct effect on investors and their choices by confirming overarching long-term trends.

Research What are golden crosses and death crosses, and how do they differ Question/Problem/ from each other? Need

Important Figures - Golden Cross:

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- - Death Cross:

Notes - Golden crosses and death crosses are exact antonyms - Golden crosses include a forward-moving bull market while death crosses contain a bear market - Both types of crosses represent a long-term trend being confirmed due to a short-term moving average crossing paths with a long-term moving average - Golden crosses start with a downtrend which then turns into an uptrend during which the short-term moving average crosses the long-term moving average; the market often then continues upward - Death crosses follow the same stages as golden crosses, but in the opposite direction - Different investors use different time periods for short-term moving averages and long-term moving averages

Cited references to No references are listed, but other relating articles that may be useful follow up on to me are provided: https://www.investopedia.com/terms/c/crossover.asp https://www.investopedia.com/articles/active-trading/010915/use-wee kly-stochastics-time-market-effectively.asp

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Follow up Questions 1. When have golden crosses actually occurred in the market? 2. Which is generally more accurate: golden crosses or death crosses? 3. How can one choose a helpful time period for their short-term and long-term moving averages?

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Article #10 Notes: Oscillator

Article notes should be on separate sheets

Source Title “Oscillator”

Source citation (APA Chen, J. (2020). Oscillator Definition. Investopedia. Retrieved Format) from https://www.investopedia.com/terms/o/oscillator.asp

Original URL https://www.investopedia.com/terms/o/oscillator.asp

Source type Scientific Research Article

Keywords “Oscillator,” “overbought,” “oversold,” “range,” “sideways market”

Summary of key Oscillators are a very important aspect of technical analysis. They points (include are quantities that range between two values; overbought stocks are methodology) represented by values close to the upper bound while oversold stocks are represented by values close to the lower bound. Some common oscillators include rate of change, relative strength index, and money flow index. Furthermore, oscillators often complement other indicators, and are the most helpful in sideways markets. To that end, oscillator predictions are significant while prices stay in a certain range, but can become inaccurate when a price breakout occurs. Price breakouts are characterized by a change in the range of prices or by the beginning of a new trend. Overall, oscillators have the potential to provide investors with meaningful data that can help make important portfolio decisions.

Research What are oscillators and how can they be interpreted in technical Question/Problem/ analysis? Need

Important Figures N/A (The article did not have figures relating to the content)

Notes - Oscillators are techniques used in technical analysis - Range between two values; values close to the upper bound reveal overbought stocks while values close to the lower bound represent oversold stocks - Commonly used to complement other indicators - Most helpful when trends in prices are not easily deciphered; very important aspect of technical analysis - Common oscillators include ROC, RSI, and MFI

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- Oscillator predictions are valuable while prices remain in a particular range, but can become distracting when a price breakout occurs - Price breakouts mark a change in the range of prices or the initiation of a new trend - Oscillators are most helpful when used on sideways markets and with other indicators

Follow up Questions 1. Which oscillator is the most accurate? 2. What steps can be taken to increase the accuracy of oscillators during non-sideways markets? 3. What indicators are oscillators commonly used with?

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Article #11 Notes: Technical Analysis

Article notes should be on separate sheets

Source Title “Technical Analysis Modern Perspectives”

Source citation (APA Scott, G., Carr, M., & Cremonie, M. (2016). Technical Analysis Format) (Publication). Retrieved from

https://www.cfainstitute.org/-/media/documents/book/rf-lit-r

eview/2016/rflrv11n11.ashx

Original URL https://www.cfainstitute.org/-/media/documents/book/rf-lit-review/201 6/rflrv11n11.ashx

Source type Professional Publication

Keywords “Technical analysis,” “momentum,” “moving averages,” “subjectivity,” “profitability,”

Summary of key Technical analysis serves to help make investment decisions and points (include has great significance in the field of financial research. Furthermore, methodology) technical analysis has always involved studying data created by market actions and by the behavior of market participants to predict possibilities for prices in the future. Suffering from poor test structures and small datasets, technical analysis has faced multiple criticisms throughout its development, and even now. For example, technical analysis’ heavy reliance on chart analysis has sparked one major criticism: subjectivity. In addition, from the “point and figure” method of the 1800s to charts with moving averages by the 1950s, technical analysis has greatly evolved overtime. Several indicators serve as important aspects of technical analysis; for instance, momentum, which is vital to understand trends in the long-run and was known as relative strength until 1993, is one of these indicators. Additionally, the study of charts and the detection of patterns have both been potent technical analysis tools, but pattern analysis has been shown to be only somewhat reliable. This lack of reliability along with the progression of computers has paved the way for another predictive tool; albeit one that has generated criticism: data mining. Technical analysis study results have often been mixed, and the greater the number of studies performed on certain facets such as moving averages, the greater the number of conflicting results. In

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general, technical analysts do not believe that simple rules yield profits, so they normally utilize multiple techniques. Recent studies and research have indicated that price action supplies market participants with important data, and that many distinct types of traders make markets function. Also, recent technological advances allow different indicators to be tested.

Research How has technical analysis evolved overtime to become the tool that Question/Problem/ it is today? Need

Important Figures N/A (The article did not have figures relating to the content)

Notes - Technical analysis, which serves to help make investment decisions, influences many other factors such as momentum and has great significance in financial research - In 2015, the MTA conducted a survey that found that technical analysis is commonly used in conjunction with other skills - Technical analysis has always involved studying data created by market actions and by the behavior of market participants to predict the possibilities for prices in the future - The “point and figure” method was a way of charting used in the 1800s; more common bar charts were established in the early 20th century, increasing the popularity of pattern analysis - Charts with moving averages were frequently used by the 1950s - When technical analysis was starting off, theories could not be well tested due to poor test structures and small datasets - A more genuine criticism of technical analysis is that chart analysis is subjective - Charles Dow looked into the relationship between the economy and the prices of stocks to form Dow Theory in the 1900s - The appreciation index is the full return of a stock throughout a bull or bear market - Relative strength (RS) became known as momentum in 1993; momentum is frequently combined with other techniques, forming the base of “fusion analysis” - Momentum is a numerical way of understanding trends, especially over longer periods of time - The study of charts and the detection of patterns have been potent tools in technical analysis - Pattern analysis has been shown to be somewhat reliable and sometimes produce great profits - The lack of security provided by pattern analysis along with

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the progression of computers led to another predictive tool that has generated criticism: data mining - The results have often been mixed in studies performed on areas of technical analysis - For example, moving averages were originally found to be effective, but a more recent study confirms that they are no longer effective - More and more studies simply resulted in an increasing number of conflicting results - Technical analysts typically utilize multiple techniques instead of simple rules since most analysts believe that these simple rules do not commonly lead to profits - The adaptive market hypothesis (AMH) states that markets follow an evolutionary system; individuals acquire knowledge from past actions and apply this knowledge in making future decisions - Recent studies and research have shown that price action supplies market participants with significant data, and that many distinct types of traders make markets function - Recent theories state that certain predictive techniques will work at certain times, but not at others - VBSR uses volatility extremes to figure out future levels of support and resistance - Recent technological advances allow indicators to be tested for technical analysis

Cited references to Asness, Clifford S. 1997. “The Interaction of Value and Momentum follow up on Strategies.” Financial Analysts Journal, vol. 53, no. 2 (March/April): 29–36.

Asness, Clifford S., Tobias J. Moskowitz, and Lasse H. Pedersen. 2013. “Value and Momentum Everywhere.” Journal of Finance, vol. 68, no. 3 (June): 929–985.

Dreman, David N., and Michael A. Berry. 1995. “Overreaction, Underreaction, and the Low-P/E Effect.” Financial Analysts Journal, vol. 51, no. 4 (July/August): 21–30.

Follow up Questions 1. What combination of indicators can best predict price movements of stocks? 2. How do support and resistance relate to bull and bear markets? 3. How accurate is VBSR?

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Article #12 Notes: Beginners Guide to Technical Analysis

Article notes should be on separate sheets * This article can no longer be accessed.

Source Title “Beginners Guide to Technical Analysis”

Source citation (APA Fidelity Staff. (2020). What Is Technical Analysis? Retrieved Format) from

https://www.fidelity.com/learning-center/trading-investing/t

echnical-analysis/introduction-technical-analysis/what-is-tec

hnical-analysis

Original URL https://www.fidelity.com/learning-center/trading-investing/technical-a nalysis/introduction-technical-analysis/what-is-technical-analysis

Source type Primary Research Article

Keywords “Technical analysis,” “charts,” “price movement,” “trends,” “support,” “resistance”

Summary of key Technical analysis involves studying previous market behavior in an points (include effort to determine what actions the market may take in the future. methodology) Relating greatly to supply and demand, technical analysis has three fundamental tenets: market action discounts everything, prices follow trends, and what happened in the past repeats itself. Stock charts - including line charts which help one to obtain a sense of the big picture, bar charts which display volatility, and candlestick charts - represent a security’s price or index over an interval of time. In addition, peaks and troughs are what determine the directions of trends. For instance, ascending peaks and troughs make up an uptrend, descending peaks and troughs compose a downtrend, peaks and troughs moving sideways in a horizontal manner reveal sideways trends. Furthermore, trend lines assist technical analysts in seeing trends, and a broken trend line indicates that the trend could be changing. While uptrend lines highlight that demand exceeds supply, downtrend lines illustrate that supply exceeds demand. Additionally, support levels indicate when a stock can no longer fall

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due to the strength of demand, and resistance levels indicate when a stock cannot rise anymore due to the strength of supply. Finally, a role reversal often occurs when a support or resistance level is broken. For example, when a price goes below a support level, that support level often transforms into a resistance level.

Research What is technical analysis and what are some of the common ways Question/Problem/ to visualize data in technical analysis? Need

Important Figures N/A (The article did not have significant figures)

Notes - Technical analysis is the study of previous market behavior in an effort to determine what the market may do in the future; it is the study of price, is not concerned with a company”s value, and relates greatly to supply and demand - The three fundamental tenets of technical analysis are that market action discounts everything, prices follow trends, and what happened in the past repeats itself - Stock charts represent a security’s price or index over an interval of time; the y-axis represents the price scale and the x-axis represents the time scale - The three main types of charts in technical analysis are line charts (which are useful to obtain the general picture), bar charts (which display volatility), and candlestick charts (which are very similar to bar charts, but follow a different format) - Peaks and troughs compose trends and determine the directions of trends - The three directions of trends are uptrends (ascending peaks and troughs), downtrends (descending peaks and troughs), and sideways trends (when peaks and troughs move sideways in a horizontal fashion) - The three trend lengths are primary (at least one year), secondary (1-3 months), and minor (shorter than a month) - Trend lines (connecting two or more points and then continuing into the future) assist technical analysts in seeing the trend, and when one is broken, the trend could be changing - Uptrend lines connect two or more low points, have a positive slope, and highlight that demand exceeds supply; downtrend lines connect two or more high points, have a negative slope, and highlight that supply exceeds demand - Support levels indicate when a stock cannot fall anymore due to the strength of demand; resistance levels indicate when a stock cannot rise anymore due to the strength of supply - When a price goes below a support level, that level’s role is reversed and it often becomes a resistance level; similarly,

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when a price goes above a resistance level, that level often turns into a support level since supply and demand have changed

Cited references to N/A (References were not provided) follow up on

Follow up Questions 1. What is the connection between a stock and a security? 2. What are the benefits and restrictions of technical analysis? 3. How was a time frame of 1-3 months selected for secondary trend lengths?

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Article #13 Notes: Universal Behavior of Extreme Price Movements in Stock Markets

Article notes should be on separate sheets

Source Title "Universal Behavior of Extreme Price Movements in Stock Markets"

Source citation (APA Fuentes, M. A., Gerig, A., & Vicente, J. (2009). Universal Format) Behavior of Extreme Price Movements in Stock Markets.

PLoS ONE, 4(12), e8243. https://doi.org/10.1371/journal.pone.0008243

Original URL https://go-gale-com.ezproxy.bpl.org/ps/retrieve.do?tabID=T002&resu ltListType=RESULT_LIST&searchResultsType=SingleTab&search Type=BasicSearchForm¤tPosition=3&docId=GALE%7CA47 2754938&docType=Article&sort=Relevance&contentSegment=ZTSI -198501P&prodId=STOM&contentSet=GALE%7CA472754938&se archId=R5&userGroupName=mlin_b_bpublic&inPS=true&ps=1&cp =3

Source type Primary Research Article

Keywords “Gaussian,” “return distribution,” “volatile,” “stability,” “mid-price”

Summary of key Drunkard's Walk, the initial theoretical study of stock prices, required points (include several refinements based on realizations that developed overtime. methodology) One of these realizations was the discovery that a static Gaussian process is unsuitable for delineating returns. The mixture-of-distributions hypothesis, established many years ago, suggests that this unsuitability is due to price changes, but fails to justify why the distribution is apparently stable over longer time periods. In contrast, the model described and tested in this article suggests that slow, yet important variations in the volatility of stocks are both the reason for this stability and the reason why return distributions are not Gaussian. By assuming that the volatile nature of stock prices are significant in long time spans rather than short

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ones, this model comes to not only these powerful conclusions, but also suggests that a single graph can capture return distributions for stocks from distinct time periods and from different exchanges.

Research Why might return distributions form a non-Gaussian shape? Question/Problem/ Need

Important Figures - Predicted vs. empirical tail exponent for each stock:

Notes - Drunkard’s Walk, the commencing theoretical study of stock prices, needed several changes based on realizations developed overtime, including that returns, instead of price differences, are random, and that the fact that huge price changes make a static Gaussian process unsuitable for return calculation - The mixture-of-distributions hypothesis, established many years ago, suggests that the return distribution is not Gaussian due to price changes, but fails to justify why the distribution is apparently stable over longer time periods - the stable Paretian hypothesis attempts to justify this trend - The model discussed and tested in the article assumes that the volatile nature of stock prices are significant in large time spans rather than short ones - using different time periods creates a return distribution that is not Gaussian - Slow, yet important variations in volatility are the reason for the stability, as well as the non-Gaussian shape of return distributions

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- The results suggest that one form can capture return distributions for stocks from distinct exchanges and different time periods

Cited references to Fama EF 1965 The behavior of stock-market prices. J Business follow up on 3834105 Stanley HE 2003 Statistical physics and economic fluctuations: do outliers exist? Physica A 318 279292

Follow up Questions 1. Why would selecting great amounts of data from only three stock markets provide extremely conclusive results? 2. What is a Gamma distribution in statistics? 3. What is a Student’s t-distribution in statistics?

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Article #14: Crossover

Article notes should be on separate sheets

Source Title “Crossover”

Source citation (APA Chen, J. (2020). Crossover Definition. Investopedia. Retrieved Format) from https://www.investopedia.com/terms/c/crossover.asp

Original URL https://www.investopedia.com/terms/c/crossover.asp

Source type Scientific Research Article

Keywords “Crossover,” “golden cross,” “trends,” “overbought,” “oversold”

Summary of key Crossovers are points where a stock’s price and indicator value points (include cross, or where two indicators themselves cross. In technical methodology) analysis, crossovers are used to predict stock movements, verify trends, and ultimately recognize when it may be time to buy or sell a certain stock. To that end, examining crossovers in conjunction with other indicators and over long periods of time can provide more accurate results. Furthermore, breakouts and breakdowns can be noted in crossovers involving moving averages. One example of such a crossover is the golden cross, in which a short-term moving average rises above a long-term moving average. In addition, stochastic crossovers can be used to tell when a stock has crossed into the overbought or oversold territories. Overall, crossovers provide a large quantity of useful information that can help investors make investment decisions.

Research What are crossovers and how do they fit into the field of technical Question/Problem/ analysis? Need

Important Figures - Golden Cross Example:

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Notes - The crossover is the point where a stock’s price and indicator representation cross, or where two indicators cross themselves - Major examples include golden cross and death cross - In technical analysis, crossovers are used to predict stock movements and verify trends - Crossovers indicate that it may be time to buy or sell a certain stock - Crossovers are commonly used in conjunction with other indicators to establish firmer predictions - Breakouts and breakdowns are typically the product of crossovers in moving averages - More evidence is provided by using longer time frames - Shorter time frames provide feedback sooner but are more prone to false signals - Stochastic crossovers serve an important purpose in determining whether a financial instrument has been overbought or oversold - When a stochastic crossover rises above the 80 band, the financial instrument becomes overbought; the instrument is oversold when the stochastic crossover falls below the 20 band - Stochastic crossovers should be used with other indicators to prevent false information - Golden Cross: A short-term moving average rises above a long-term moving average

Cited references to No references are listed, but other relating articles that may be useful

Parikh 43 follow up on to me are provided: https://www.investopedia.com/terms/k/kijun-line.asp https://www.investopedia.com/articles/active-trading/052014/how-use -moving-average-buy-stocks.asp

Follow up Questions 1. What are some examples of crossovers other than golden crosses and death crosses? 2. When might examining a shorter time frame be a better choice than looking at a large period of time? 3. What quality of moving averages makes them so well suited for crossover analysis?

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Article #15: Why are So Many People Afraid to Invest in the Stock Market?

Article notes should be on separate sheets

Source Title “Why are So Many People Afraid to Invest in the Stock Market?”

Source citation (APA Boyer, C. (2019). Why are so many people afraid to invest in the Format) stock market? Wealthify. Retrieved from https://www.wealthify.com/blog/why-are-so-many-people-a

fraid-to-invest-in-the-stock-market

Original URL https://www.wealthify.com/blog/why-are-so-many-people-afraid-to-inv est-in-the-stock-market

Source type Scientific Research Article

Keywords “Risk,” “fear,” “outperform,” “risk management”

Summary of key There are several explanations as to why people are concerned points (include about investing. There was a Global Financial Crisis in 2008 that has methodology) left investing with a connotation of fear and uncertainty. In addition, the success of one’s return is dependent on the strength of their portfolio, meaning that investment risk is inevitable. Since humans want to avoid losing as much as possible, many choose not to invest and accept the risk associated with it; 62% of Brits fall under this category. However, deciding not to invest could actually pose a detriment to one’s ability to achieve their financial goals in the long-run. Barclays conducted a study that discovered that stocks kept for any given decade since 1899 have carried a 91% chance of performing better than cash. Furthermore, there exist several strategies to manage the risk that stocks pose. For instance, investing in a wide array of stocks rather than relying on a small group of stocks helps to control risk. In addition, holding onto investments in the long-term will reduce risk; although there will be difficult days where one’s portfolio loses value, selling stocks immediately can lead to missed opportunities in the future.

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Research What causes many individuals to avoid investing in the stock Question/Problem/ market? Need

Important Figures N/A (The article did not use figures)

Notes - The 2008 Global Financial Crisis continues to make people worried about investing - Returns are dependent on the strength of one’s portfolio - Humans are more inclined to eliminate the possibility of losing money than to have a chance of making a lot more - 62% of Brits do not invest - Fear of losing money makes people stay away from investing - Not investing could lower the possibility of achieving financial goals in the long-run - A study by Barclays noted that stocks kept for any given decade since 1899 have carried a 91% chance of performing better than cash - Investment risk is minimized by investing in a variety of stocks rather than relying on a few stocks performing well - Maintaining investments over long periods of time can help reduce risk - Markets do not always have good days, but selling stocks each time they lose value could result in missed opportunities - Robo-Advisors can help prospective investors manage risk

Cited references to Gerner, M. (2019). Stocks beat cash and bonds over the long follow up on term. MoneyWeek. Retrieved from https://moneyweek.com/505257/stocks-beat-cash-and-bonds

-over-the-long-term

Follow up Questions 1. How would one go about convincing more individuals to consider investing? 2. How was the Barclays study referenced in the article conducted? 3. Which of the solutions to reduce investment risk mentioned in this article is most effective?

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Article #16: What Is the Stock Market and How Does It Work?

Article notes should be on separate sheets

Source Title “What Is the Stock Market and How Does It Work?”

Source citation (APA Davis, C., & O’Shea, A. (2020). What Is the Stock Market and Format) How Does It Work? NerdWallet. Retrieved from https://www.nerdwallet.com/article/investing/what-is-the-st

ock-market

Original URL https://www.nerdwallet.com/article/investing/what-is-the-stock-market

Source type Scientific Research Article

Keywords “Stock Market,” “investor,” “indexes,” “volatility,” “long-term”

Summary of key The Stock Market is an electronic entity open to almost anyone. Its points (include performance can be tracked by examining the performances of methodology) several main stock market indexes. These indexes cover a wide range of stocks and are assumed to be representative of the whole stock market. Through the process of initial public offering, companies make their stock shares accessible to investors. The essence of the stock market lies in the fact that investors hope that price movements are favorable to them and provide them with as much profit as possible. Stock prices are influenced greatly by supply and demand, and market volatility is a cause of investment risk. Although stocks carry more investment risk than other securities, they provide an opportunity for a greater payout compared to other securities. Long-term investing has proven to be very effective, and stocks should be utilized to help achieve an individual’s long-term goals.

Research How does the stock market run and what factors influence the stock Question/Problem/Ne market? ed

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Important Figures - S&P 500 Performance from 1990-2020:

Notes - The Stock Market is open to almost anyone - There are several main stock market indexes, and the performance of these indexes is tracked - Investors hope that price movements will work in their favor, giving them more profit - Companies make shares of their stock accessible to investors by a process called initial public offering - Supply and demand of a certain stock have a major influence on prices - Stock trading is electronic now, but used to be physical - Market indexes that cover a wide array of stocks are often viewed as representative of the market as a whole - Long-term investing has proved to be much more effective and much less risky than quickly trading stocks through day trading - Market volatility causes swings and falls and create investment risk - Compared to several other securities, stocks carry more risk but offer a greater opportunity for reward - Stocks are not well-suited for the short-term, but should be utilized to help achieve long-term goals

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Cited references to No references are listed follow up on

Follow up Questions 1. What are some other common securities? 2. Which security presents the least amount of risk to an investor? 3. What evidence is provided for the claim that several indexes are representative of the stock market as a whole?

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Article #17: Technical Indicator

Article notes should be on separate sheets

Source Title “Technical Indicator”

Source citation (APA Chen, J. (2020). Technical Indicator. Investopedia. Retrieved Format) from

https://www.investopedia.com/terms/t/technicalindicator.asp

Original URL https://www.investopedia.com/terms/t/technicalindicator.asp

Source type Scientific Research Article

Keywords “Technical analysis,” “market behavior,” “overlays,” “oscillators”

Summary of key Technical analysts observe technical indicators, which are numerical points (include values and signals, to predict the behavior of the market in the future. methodology) Technical indicators place a heavy focus on historical trading data and typically incorporate the price and volume of stocks. Since these indicators supply an investor with insight into short-term behavior changes of the market, they are commonly used by more dedicated stock traders. There are two fundamental types of indicators: oscillators and overlays. Overlay indicators produce values that follow the same scale as stock prices while oscillators have their own scale. Technical analysts usually employ diverse indicators in conjunction to analyze the state of a stock. Two examples of indicators that illustrate significant trends in stock prices are the relative strength index and the moving average.

Research What are technical indicators and how do they contribute to technical Question/Problem/Ne analysis as a whole? ed

Important Figures N/A (The article did not have any important figures)

Notes - Technical indicators are quantitative values and signals that technical analysts observe

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- Technical indicators are used to predict future stock market behavior - Concentrated on historical trading data - This data includes the price and volume of stocks - Often used by more committed traders - They provide insight into behavior changes in the short-term - The two fundamental types of technical indicators are oscillators and overlays - Overlay values follow the same scale as stock prices while oscillators have their own ranges - Diverse indicators are commonly used by technical analysts to analyze a stock - Moving averages and the relative strength index are two examples of technical indicators that can highlight important trends in stock prices - Bull markets promote the purchase of a particular stock while bear markets support the selling of a stock

Cited references to No references are listed, but other articles that may be useful to me follow up on are provided: https://www.investopedia.com/terms/o/overbought.asp https://www.investopedia.com/terms/p/price-action.asp

Follow up Questions 1. How can diverse indicators corroborate each other? 2. Which are more indicative of future market behavior: overlays or oscillators? 3. What is a good amount of indicators to analyze a particular stock?

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Article #18: How Investing Works

Article notes should be on separate sheets

Source Title “How investing works”

Source citation (APA Principal Financial Staff. (2020). How investing works. Principal. Format) Retrieved from

https://www.principal.com/individuals/explore-life-money/h

ow-investing-works

Original URL https://www.principal.com/individuals/build-your-knowledge/how-inve sting-works

Source type Scientific Research Article

Keywords “Investing,” “financial goal,” “saving,” “investing strategies,” “short-term,” “long-term”

Summary of key The concept of investing refers to purchasing investments, which are points (include simply financial products, and attempting to sell them for more than methodology) their original price. This method of investing could supply an individual with more money, but just saving one’s money offers a much smaller possibility of growing that money substantially. However, if one is looking to achieve a short-term financial goal, saving may be a better option compared to investing. Three major strategies employed by investors are beginning to invest earlier rather than later, holding onto investments for long time intervals, and investing in diverse assets or asset categories. By starting to invest sooner rather than later, an investor allows the power of compounding to go into effect earlier; delaying investing by even a decade could lead to significantly less money obtained overtime. Although investment risk is inevitable, this risk can be controlled by investing in several distinct types of products. Finally, when investing, it is crucial to keep in mind the many tax rules that must be followed.

Research What factors are important to keep in mind while investing? Question/Problem/Ne

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Important Figures - Amount of money saved up by age 65 based on age when investing begins:

Notes - Investing requires purchasing financial products, called investments, and trying to sell them for more than originally bought for - This method could provide an individual with more money - Saving provides a smaller possibility of earning substantial money compared to investing - Saving may be a stronger choice than investing for short-term goals - Beginning to invest sooner rather than later, keeping investments for long periods of time, and diversifying investments are three key strategies employed by investors - Starting to invest very early enables the power of compounding to gather even more money overtime - Significantly less money could be obtained by waiting only a decade to start investing - Investment risk cannot be avoided, but investing in several different different types of products will help mitigate this risk - For the stock market, spreading out investments may mean investing in distinct categories of assets - There are several tax rules relating to investments that must be followed

Cited references to No references are listed follow up on

Follow up Questions 1. Are there any cases in which investing may be a weaker

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choice compared to saving in the long-term? 2. Under what conditions might the power of compounding actually be detrimental to one’s investments? 3. What specific tax laws are important to keep in mind when investing?

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Article #19: Don’t Let These Fears Stop You From Investing

Article notes should be on separate sheets

Source Title “Don’t Let These Fears Stop You From Investing”

Source citation (APA Becker, M. (2020). Don’t Let These Fears Stop You From Format) Investing. TheSimpleDollar. Retrieved from https://www.thesimpledollar.com/investing/too-many-millen

nials-are-afraid-of-investing

Original URL https://www.thesimpledollar.com/investing/too-many-millennials-are- afraid-of-investing

Source type Scientific Research Article

Keywords “Fear,” “losing,” “trustworthy,” “mistake”

Summary of key In a recent survey conducted by Ally Financial, 61% of respondents points (include between the ages of 18 and 39 indicated that they believe stock methodology) market investing is “scary or intimidating.” In addition, many people acknowledge the importance of investing, but are still too afraid to actually invest. These individuals’ fear can be broken into four major pieces. FIrstly, the fear of making a bad investment and losing money is very common. However, when one begins investing, savings rates are more vital than returns, and performing well is not very hard. Secondly, believing that one lacks a sufficient amount of money to invest is a common worry. The truth is that investing can happen regardless of how much money is contributed, and the quantity of money that needs to be saved up later will only be decreased by investing even a small amount of money. Thirdly, many individuals are afraid of not knowing who is trustworthy when it comes to financial advice. Generally, those who have decided not to accept pay from large financial companies provide strong advice. Furthermore, investors have access to many extremely helpful resources to guide them. Lastly, not knowing where to begin is

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common. Adding to one’s 401(k) is a good place to start, but it is not the only choice. Overall, since saving money overtime is a very effective strategy, a major financial mistake would be to avoid investing.

Research What are some common investing fears and how can these fears be Question/Problem/Ne controlled? ed

Important Figures N/A (The article did not have any important figures)

Notes - 61% of Americans between the ages of 18 and 39 stated that they believe stock market investing to be “scary or intimidating” in a recent Ally Financial survey - Many individuals realize the importance of investing but are fearful of actually doing it - The fear of losing money through a bad investment is common - Savings rates are more important than returns when one begins investing, and performing well is not overly difficult - Another common fear is believing that one does not have a sufficient amount of money to invest - Investing can occur despite having only a small amount of money available and investing this small amount will decrease the quantity of money that will need to be saved later - A third fear of investing is not knowing who is trustworthy - Individuals who have decided not to obtain money from large companies are a good source of helpful advice - Consumers have access to a large pool of resources that are better than ever before presently - A final fear of investing is not knowing how to begin - Adding to one’s 401(k) is a strong way to commence the journey of investing - Overall, not investing is a major financial mistake as saving money overtime is a very potent method

Cited references to No references are listed follow up on

Follow up Questions 1. What would be a good rule for the minimum amount of money to invest at once? 2. Why might avoiding large financial companies be the key to

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obtaining trustworthy advice? 3. How have these fears of investing been addressed overtime?

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Article #20: Risk-Free Return

Article notes should be on separate sheets

Source Title “Risk-Free Return”

Source citation (APA Kenton, W. (2020). Risk-Free Return. Investopedia. Retrieved Format) from

https://www.investopedia.com/terms/r/risk-freereturn.asp

Original URL https://www.investopedia.com/terms/r/risk-freereturn.asp

Source type Scientific Research Article

Keywords “Risk-free,” “return,” “risk premium,” “expected”

Summary of key Risk-free returns refer to investments that carry no investment risk at points (include all and have a guaranteed return. In addition, the expected interest methodology) rate of a risk-free investment over a particular interval of time is referred to as the risk-free rate of return. Although almost all investments observe risk to some degree, U.S. Treasuries carry no risk. This is because the U.S. Government can simply produce more money when cash flow levels are low. The difference between a risk-free return and the return on a more risky investment is represented by the risk premium. Moreover, the Capital Asset Pricing Formula can be used to calculate an asset’s predicted return amount. While the minimum return that an investor should expect from an investment is theoretically the risk-free rate, this expectation does not always prove to be accurate.

Research What are risk-free investments and how do they compare to most Question/Problem/Ne other investments? ed

Important Figures N/A (The article did not have any important figures)

Notes - The concept of risk-free return applies to investments that have a guaranteed return and possess no investment risk

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- Risk-free rate of return refers to the expected interest rate of a risk-free investment over a certain time interval - Risk-free returns are usually not plausible, as some level of risk is observed by almost all investments - Examples of an investment that carries no risk are U.S. Treasuries - This is because if the U.S. Government experiences low levels of cash flow, it can produce more money - The risk premium represents the difference between a risk-free return and a return on an investment that carries a greater risk - An asset’s anticipated return can be found by using the Capital Asset Pricing Model formula - The risk-free rate is theoretically the minimum return that an investor should obtain from an investment, but this does not hold true in reality

Cited references to No references are listed, but other articles that may be useful to me follow up on are provided: https://www.investopedia.com/terms/r/riskdiscount.asp https://www.investopedia.com/terms/c/capm.asp

Follow up Questions 1. Other than U.S. Treasuries, are there any other investments that are risk-free? 2. How do average returns on risk-free investments compare to those on investments that carry risk? 3. How does the U.S. Government make sure to avoid inflation when it prints more money?

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Article #21: Risk Discount

Article notes should be on separate sheets

Source Title “Risk Discount”

Source citation (APA Hussain, A. (2020). Risk Discount. Investopedia. Retrieved from Format) https://www.investopedia.com/terms/r/riskdiscount.asp

Original URL https://www.investopedia.com/terms/r/riskdiscount.asp

Source type Scientific Research Article

Keywords “RIsk,” “risk discount,” “risk premium,” “expected return,” “portfolio”

Summary of key Risk discount denotes a scenario in which an investor agrees to points (include sacrifice a large anticipated return in exchange for a low investment methodology) risk when making an investment. The risk tolerance and overall goals of an investor determine whether or not they will make this decision. The opposite scenario of risk discount - one in which greater risk is accepted for the possibility of a greater return - is referred to as risk premium; individuals who are reluctant to accept risk tend to prefer risk discounts over risk premiums. Risk premiums utilize treasury bills as a comparison point since treasury bills are free of risk, but present low returns. The expected return of a stock is known as the equity premium, but stocks are harder to predict compared to bonds and are thus riskier than bonds. When forming their portfolios, investors attempt to balance risk in an effort to create a safe overall portfolio.

Research What are risk discounts and how do they compare to risk premiums? Question/Problem/Ne ed

Important Figures N/A (The article did not have any important figures)

Notes - Risk discount is a scenario in which an investor accepts a lower anticipated return for a lower investment risk - An investor’s risk tolerance and goals determine when they might want to make a safer investment

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- Risk premium denotes an investor’s choice to take an investment that presents greater risk in hopes of obtaining a greater return - Risk-averse individuals prefer risk discounts over risk premiums - Treasury bills are utilized as a comparison point for the risk premium since they are risk-free, but offer low returns - The expected return of a stock is referred to as the equity premium - Stocks are riskier than bonds since they are more difficult to predict - Equity risk, duration risk, and credit risk are three different types of return drivers, or sources of risk - Investors attempt to balance risk to create a safe portfolio

Cited references to No references are listed, but other articles that may be useful to me follow up on are provided: https://www.investopedia.com/terms/c/country-risk-premium.asp https://www.investopedia.com/terms/r/riskadjustedreturn.asp

Follow up Questions 1. What types of investments typically present the highest risk? 2. What might a relatively safe portfolio look like? 3. What drives the risk tolerance of an individual?

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Article #22: Treynor Index

Article notes should be on separate sheets

Source Title “Treynor Index”

Source citation (APA Peters, K. (2020). Treynor Index. Investopedia. Retrieved from Format) https://www.investopedia.com/terms/t/treynor-index.asp

Original URL https://www.investopedia.com/terms/t/treynor-index.asp

Source type Scientific Research Article

Keywords “Excess return,” “beta,” “portfolio,” “risk,” “return”

Summary of key The Treynor Index inspects an investment’s excess return per each points (include unit of risk. Excess return denotes the difference between an methodology) investment’s return and the return that could have been obtained through investing in a risk-free investment. In addition, the beta is the unit used to measure the market’s general risk. The essence of the Treynor Index lies in the fact that an investment’s performance must be altered to take risk into account before being an accurate indication. Greater Treynor indices reveal that a portfolio is experiencing greater excess returns per unit of risk and that the portfolio is strong overall. However, the Treynor Index is not always indicative of a portfolio’s future performance; thus, investors should not be dependent on it.

Research What is the Treynor Index and how is it used? Question/Problem/Ne ed

Important Figures N/A (The article did not have any important figures)

Notes - The Treynor Index examines an investment’s excess return per unit of risk - Excess return refers to the amount that a return is greater than the return that could have been achieved through a risk-free investment - The beta quantifies a market’s general risk

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- A greater Treynor Index indicates that greater excess returns are being achieved per unit of risk and that the portfolio was strong - The basic foundation of the Treynor Index is that the performance of an investment must be adjusted to account for risk in order to provide an investor with an accurate perception - Treynor Index is not always indicative of the future performance of a portfolio and investors should not rely on it

Cited references to No references are listed, but other articles that may be useful to me follow up on are provided: https://www.investopedia.com/terms/t/treynorratio.asp https://www.investopedia.com/terms/r/riskmanagement.asp

Follow up Questions 1. What are the specific differences between the Treynor Index and the Sharpe Ratio? 2. How are precise beta values calculated? 3. Are there other tools similar to the Treynor Index and the Sharpe Ratio to corroborate their results?

Project Notes: Project Title: Be Financially Secure: Predicting Auto Stock Prices with Past Data ​ Name: Rutvik Parikh ​

Project Notes: Project Title: Be Financially Secure: Predicting Auto Stock Prices with Past Data Name: Rutvik Parikh