Summary of William H. Pike & Patrick C. Gregory's Why Stocks Go Up and Down

By IRB Media

Get the Summary of William H. Pike & Patrick C. Gregory's Why Stocks Go Up and Down in 20 minutes. Please note: This is a summary & not the original book. Original book introduction: Why Stocks Go Up and Down is an in depth introduction to stocks and bonds. It explains the basics of of financial statement analysis, cash flow generation, stock price valuation, and more. Commonly misunderstood terms such as "capitalize", "equity," and "diluted earnings" are explained clearly. Stock valuation methods including price/earnings ratio, price/cash flow ratio, and Enterprise Value / EBITDA are covered. The book is about fundamentals; it is not an investment system or "how to make a million dollars in the market". The subtitle, "The Book You Need To Understand Other Investment Books" says it best. That subtitle is the result of comments received from readers over many years.

• Language: English
• Publisher: IRB Media
• Release date: Nov 25, 2021
• ISBN: 9781638158493

IRB Media

With IRB books, you can get the key takeaways and analysis of a book in 15 minutes. We read every chapter, identify the key takeaways and analyze them for your convenience.

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Insights on WIlliam Pike and Patrick Gregory's Why Stocks Go Up and Down

Contents

Insights from Chapter 1

Insights from Chapter 2

Insights from Chapter 3

Insights from Chapter 4

Insights from Chapter 5

Insights from Chapter 6

Insights from Chapter 7

Insights from Chapter 8

Insights from Chapter 9

Insights from Chapter 10

Insights from Chapter 11

Insights from Chapter 12

Insights from Chapter 13

Insights from Chapter 14

Insights from Chapter 15

Insights from Chapter 16

Insights from Chapter 17

Insights from Chapter 18

Insights from Chapter 19

Insights from Chapter 1

#1

The author worked for a small business that manufactured and sold mousetraps. The author opened a business bank account and began purchasing material and equipment for the company.

#2

The Balance Sheet is a snapshot of a company’s financial health at a given moment in time. It shows the company’s assets, Liabilities, and Owner's Equity at that moment.

#3

The net profit of $15 is classified as retained earnings in the owners’ equity section of the balance sheet. Thus, the balance sheet now looks like this: Reviewing the right-hand side of the balance sheet, notice that ownership equity is not a liability.

#4

The balance sheet details a company's financial condition at a specific point in time. It shows what assets and liabilities a company has, and how much money it has made and spent.

#5

The store owner informed JMC that although all the traps had been sold, she would not be able to pay him until the 10th of March. At this point, JMC created a new balance sheet and income statement.

#6

In order for Jones to take out $5, he would have to declare a dividend, which he did. He subtracted $5 from the Cash account and added it to Retained earnings.

#7

The $245 under Current assets is the amount of money that the company has in its checking account. The convention is to subtotal both current assets and liabilities. The current assets that are easiest to convert into cash come first, followed by the current assets that are most difficult to convert into cash.

Insights from Chapter 2

#1

When raising funds to start a business, you have to consider both the money you’ll need to buy the necessary assets and the money you’ll need to pay back the initial investors. Raising money through an initial public offering, or IPO, is risky since it is given to many people, not just a few.

#2

The author and his four friends created a new company, JMC, by converting a sole proprietorship into a corporation. A corporation is a legal entity, separate and distinct from its owners. It can have assets, debts, and employees. However, it is taxed differently from its owners, who are taxed on their share of the profits.

#3

Every shareholder in a company has the right to vote on issues that come before the company's stockholders meeting. Each share entitles the holder to one vote.

#4

Most companies have one annual stockholders meeting, at which the board of directors is elected. Dissatisfied stockholders can replace the board with someone more to their liking at the next meeting. In a closely held company, the meeting might be rather informal, as the shareholder with the majority stake would have the ability to elect himself or herself as president.

#5

The $450 paid in by the investors was used to purchase 5,000 shares of common stock, for a total of $250 per share. This was the first time the investors had seen their investment.

#6

In a company’s balance sheet, the ownership is represented by the capitalization of the company, which is divided into two parts: Common stock and additional paid-in capital. The Common stock represents the portion of the company that belongs to the public, and is represented by the first number, Authorized 100 shares.

#7

When a company wants to increase the number of shares available for sale, it can either ask