Understanding Economics

Module 3 Understanding Economics

Presenter: James Percival

Contact Information:

Email Address: jpercival@train2invest.com Phone: (204) 237-4972 ext. 209 1-866-267-3147 ext. 209

Agenda

The Law of Supply and Demand GDP: Measuring a Nation’s Production and Wealth Growth Examining Recessions and Expansions Summary of IMF 2010-2011 Outlook Economic Indicators that Move the Market

The Law of Supply and Demand

Supply and Demand

Supply:

Existing quantity of a good or service that is currently available from all known sources.

Demand:

Quantity of a good or service that is needed or wanted.

Normally easy to measure

Normally difficult to measure

$$ PRICE $$

Focus Sectors: High Demand/Tight Supply

Three scenarios: 1) Oversupply/Weak Demand, OR 2) Balanced Supply/Demand, OR 3) Tight Supply/Strong Demand. The aim is to invest in sectors of the stock market where companies sell products or offer services that are high in demand and are tight in supply.

Factors to Consider when looking at Supply/Demand Trends

1) How easy is it to bring on new supply? It is a lot easier to ramp up production of a popular new cell phone than it is to bring a new mine into production to meet increasing demand. Is the item in demand politically sensitive? Goods like crude oil and other natural resources tend to be political bargaining tools; therefore new supply can be more difficult to bring to market or supply disruptions can occur due to geopolitical tensions among nations – this is a positive for the price of the underlying commodity and producers in politically safe areas. Is the good or service found in few regions yet essential to many? If we look at oil, copper, or potash for instance we find that economically viable deposits are found abundantly in few areas of the world yet they are used virtually everywhere.

2)

3)

Factors to Consider when looking at Supply/Demand Trends

4) Are there substitutes readily available for the good or service...