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Let’s get back to basics about the stock market

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If you watch the news – and who doesn’t here at Ticker News – you’ll notice there is a lot of discussion about the stock market.

Whether a company price has moved up or down, a new feature has been announced, or if sales of a particular product have exceeded expectations, can have an impact.

So, what does it all mean? We’re here to help you get your head around it all.

WHAT IS THE STOCK MARKET?

The stock market is a place for people (typically known as investors) to buy and sell individual company shares, funds and other financial products.

Changes in share prices allow investors to buy or sell financial products they are interested in owning.

They allow for investors to trade owning part of a public company for capital.

Stock markets are regulated, and have to follow a defined set of rules and procedures, that are set out by regulators in each jurisdiction such as the Securities and Exchange Commission (SEC) in the United States, the Financial Conduct Authority (FCA) in the United Kingdom, and the Securities and Futures Commission (SFC) in Hong Kong, to name a few.

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SO, YOU WANT TO BECOME AN INVESTOR?

Now that you have a grasp of what the stock market is, and how it broadly works, you’ve decided to take the next step and buy some shares (also known as equity) in a company – congratulations.

But what should you buy?

That choice is up to you, as there are thousands of companies available on each exchange to buy into.

But before you can buy a company that is listed on a stock exchange, you have to choose your broker – or the third-party that will allow you to buy and sell shares on the stock market. The broker is the one who will be able to grant you access to all the available companies.

And with thousands of brokers out there, how do you know who to choose?

Several factors come into play: access to markets right across the world, reputation (so you know they will be around during the good and bad times of the market), fees (as you don’t want to be paying too much for the service to buy and sell your stocks), speed (to enact a purchase and sell) and technological advancements.

And if you’re a person who likes to read reviews or follow guides from others about who to choose, winning the Best Online Broker Award five years in a row is a strong endorsement for Interactive Brokers, beating the likes of RobinhoodVanguard and Charles Schwab.

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CAN IT BE RISKY?

Just like any form of investment, there is a chance that your capital can increase or decrease, and investors even need to take into consideration the possibility of losing all their invested money.

Investments in some companies are said to be riskier than in others.

This could have to do with how established a company is, how it is managed, how well it can raise money to expand, how successful their products are to the public or how nimble it is.

What’s the best thing you can do before outlaying any capital – research, research, research. And with a wealth of information at your fingertips, you can feel secure in the knowledge of the company – or companies – you are investing in.

Do your own research.

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Money

Boeing CEO to depart with lucrative exit package despite chaos

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Boeing CEO Dave Calhoun is set to step down from his position at the end of the year, walking away with a substantial payout despite challenges faced during his tenure.

Here are the key points:

  • Massive Payout: Despite Boeing’s stock price plummeting by 43% since Calhoun took over as CEO in 2020, he is poised to receive a $24 million payment upon his departure.

  • Additional Compensation: Calhoun holds options that could potentially earn him an additional $45.5 million if his successor manages to boost Boeing’s share price by 37%.

  • Comparative Compensation: Calhoun’s compensation during his tenure exceeds that of CEOs in similar industries, despite Boeing’s stock underperforming in comparison.

Boeing CEO Dave Calhoun’s impending departure at the end of the year has sparked controversy as he stands to walk away with a substantial payout, despite the company’s tumultuous journey under his leadership.

READ MORE: Boeing CEO to step down

Despite inheriting a company reeling from the aftermath of two deadly 737 Max crashes, Calhoun’s tenure has been marred by further setbacks, including the recent Alaska Airlines door blowout incident that further tarnished Boeing’s reputation.

Boeing offers CEO $5.3 million incentive to stay through recovery …

With Boeing’s stock price plummeting by 43% during Calhoun’s time at the helm, questions arise about the correlation between executive compensation and company performance, especially in the face of such significant challenges.

‘Raised eyebrows’

Calhoun’s lucrative exit package, valued at $24 million, has raised eyebrows among shareholders and industry observers alike.

Additionally, the potential for Calhoun to earn an additional $45.5 million based on the future performance of Boeing’s shares has intensified scrutiny over executive compensation practices.

This sizable payout contrasts starkly with Boeing’s stock performance, which has significantly underperformed compared to both industry peers and broader market indices, highlighting the dissonance between executive rewards and shareholder value creation.

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Money

It’s been a record year for CEO compensation

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In 2023, Broadcom’s CEO Hock Tan was granted a stock award worth $161 million, propelling him into the realm of highest-paid CEOs.

However, as the company’s share price surged, the value of Tan’s award skyrocketed to approximately $1.3 billion, outpacing even the shareholders’ annual returns.

Tan’s compensation reflects a broader trend among top executives in the tech sector, where awards of restricted stock and stock options surged in value alongside company share prices.

Notably, CEOs like Charles Robbins of Cisco Systems and Shantanu Narayen of Adobe also saw substantial increases in their compensation, doubling in some cases.

The disclosure of such equity growth in executive compensation is a new requirement by the Securities and Exchange Commission (SEC), providing shareholders with insights into the changing value of executives’ awards throughout the year.

CEO pay is on the rise.

New heights

Overall, CEO pay at major S&P 500 companies reached new heights in 2023, rebounding from slower growth in the previous year. The median pay for these CEOs rose to $15.6 million, up from $14.1 million in 2022, reflecting a surge in equity awards.

Broadcom clarified that Tan’s stock award is designed to span five years, with no plans for additional equity grants or cash bonuses during that period.

Tan’s compensation, which amounts to approximately $33 million annually over five years, is contingent upon his continued tenure and specific share price targets.

While the initial valuation of Tan’s restricted shares stood at $160.5 million, the surge in Broadcom’s share price prompted the company to reassess the likelihood of meeting vesting conditions.

This reassessment suggests that Tan may not receive all the shares initially granted.

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Money

Market forecast: weather whirlwinds influencing investments

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Prime conditions for commodity investments arise from global weather shifts, geological tensions, and rising interest rates.

With global weather patterns causing disruptions in traditional supply chains, coupled with geopolitical tensions over natural resource access, and the anticipation of higher interest rates impacting financial markets, the conditions for commodity investments have reached exceptional levels.

Amidst this backdrop, Farrer Capital has emerged as a standout player, leveraging its unique ‘blue ocean’ approach to capitalize on price dislocations and scarce competition in the market.

Mark Wyld from MW Wealth joins the show to share his insights on the inclement weather impacting the market.

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