Stock market math PDF

Stock market math PDF- Michael Thomsett

Stock market math PDF- The Essential Formulas for Selecting and Managing Stock and Risk shows you how to calculate return, leverage, risk, fundamental and technical analysis problems, price, volume, momentum and moving averages, including over 125 formulas and Excel programs for each, enabling readers to simply plug formulas into a spread sheet. This book is the definitive reference for all investors and traders. It introduces the many formulas and legends every investor needs, and explains their application through examples and narrative discussions providing the Excel spreadsheet programs for each.

Category: Stock

Author: Michael Thomsett 

Language: English

Free Download link: At the end of the post

Introduction- Stock market math PDF

Investing requires mastery of certain mathematical tasks and calculations. However, knowing the formula is not enough; you also need to be able to understand and therefore express that formula in terms enabling you to quantify risk. This book is designed for that purpose.

Who this Book is For
This book is designed for a spectrum of investors, from novices to seasoned professionals. Its purpose is to summarize in a single text the limited number of calculations everyone needs to be a better-informed investor. This involves three broad areas where calculations need to be made. First is the basic investment calculation involving your portfolio, the computation of yield and return you need to make in order to judge your success. Because you hold investments for varying amounts of time, it is essential to develop a method of uniformity, so that your calculations are truly comparable and consistent. Second is the range of calculations used by corporations in computing their profitability, cash flow, and use of capital. As an investor, you need to understand these calculations so that you will be able to track corporate reporting and outcome of operations.

Third is a broad range of stock analysis which is the means for picking one company over another. This occurs in two separate ways: fundamental analysis and technical analysis. The fundamentals are the financial reports and the study of them, and technical analysis involves a study of a stock’s price trends.

This book is set up to break down the many calculations every investor needs into logical chapters, and to present this information in context. Most people will agree that investment success is more likely to occur when your information is sound. Not only do you need solid information to know when or if to buy or sell; you also need to utilize intelligent formulas and tests in order to make informed judgments.

Table of Contents- Stock market math PDF

Chapter 1: Rates of Return on Investment: What Goes In, What Comes Out
Judging the Outcome – What Did You Expect?
The Basic Equation: Return on Cash Invested
Calculating Option Trading Returns
Taxes and Investment Return
Chapter 2: Returns on Capital: Putting Cash to Work
Calculating Returns from the Corporate View
Calculating Average Net Worth
Net Worth Versus Total Capitalization
Preferred Stock as Hybrid Capitalization
The Importance of “Use of Capital”
Chapter 3: Leverage and Risk Analysis: Maximizing Other People’s Money
Calculating the Cost of Money
Annualized Return
Leverage-Based Risk—the P/E Ratio as a Way to Quantify
Using Options as a Form of Leverage
Chapter 4: Long-Term Trends: Patience Rewarded
A Realistic View: Long-Term Returns and Annual Rates
Total Net Annualized Return
Carryover Losses and Net Return
Realistic Expectations: Inflation and Taxes
Compound Return Calculations
Other Cash Flow Trends
Return Formulas

Useful Return Shortcuts
Estimating the Value of Deposits over Time
Chapter 5: Core Earnings and Net Worth Adjustments: Making the Numbers Real
The Problem with Today’s Accounting Rules
Flaws in the GAAP System – a Passive Approach to Reporting
Examples of Material Expenses
Balance Sheet Problems – Inaccurate Valuation
Recalculating the Key Ratios
Recalculating Net Worth
Finding Core Earnings – Comparative Analysis
Chapter 6: Fundamentals: Balance Sheet Tests You Need to Know
The Nature of Fundamental Analysis
Basics of the Balance Sheet
Working Capital Tests
Accounts Receivable Tests
Inventory Tests
Long-Term Asset Tests
Tangible and Total Book Value
Chapter 7: Fundamentals: Operating Statement Tests You Need to Know
The Basics of the Operating Statement
Revenue Trends
Earnings Trends
Revenue Compared to Direct Costs and Expenses
Chapter 8: Market Trend Calculations
Index Weighting
Breadth of the Market
Short Interest Ratio
New Highs and New Lows

Put/Call Ratio
Mutual Fund Ratios
Chapter 9: Price Indicators
The Basics of Technical Analysis
The Random Walk Hypothesis and the Efficient Market Theory
Basic Price Calculations
Chart Patterns and Interpretations
Technical Tests of Market Sentiment
Breadth of Trading
Chapter 10: Volume Indicators
Change in Volume
On Balance Volume (OBV)
Accumulation/Distribution (A/D)
Money Flow Index (MFI)
Large Block Ratio
Chapter 11: Momentum Oscillators and Moving Averages
Overview, Momentum Oscillators
Relative Strength Index (RSI)
Moving Average Convergence Divergence (MACD)
Stochastic Oscillator
Moving Averages
Bollinger Bands (BB)
Chapter 12: Combined Testing: Merging Price and Financial Tests
Effective Use of Combined Analysis
Valid Versus Invalid Forms of Testing
Identifying Important Combined Tests
Additional Price-Based Combined Tests
The Oddities of Hybrid Analysis
Appendix A Stock Market Formulas: Summarizing the Essentials


I am thankful Michael Thomsett was able to bring clarity and context to investment performance measurement. It’s a foreign language to so many but vital to our ability to save and retire. A great read for anyone interested in the markets.
–Jakob Rohn, Co-founder, WorkN and Board Member, Delta Data

Michael Thomsett has done it again—simple, practical and actionable advice for anyone seeking to understand how the stock market works while limiting downside risk. An essential encyclopedia of market knowledge presented with simplicity. A “must read” reference for anyone interested in the stock market.
–Gary Lynch, CEO & Founder, The Risk Project, LLC

Score another winner for Michael Thomsett! In Stock Market Math the education guru is back, big time—providing us with the blueprints for success. With a writing style that is at once comprehensive, yet easy to understand, Thomsett’s trademark ability to “make the complex simple” is on full display. Filled with wisdom, Thomsett’s book tackles concepts that will appeal to investors at every level. Beginners will enjoy his breakdown of investment building blocks, while seasoned pros will appreciate his deeper dive into the material. Yet all will take something away from Thomsett’s book—and that something is the ability to take higher and more consistent profits out of the stock market.
–Michael Stoppa, Author,
The Options Alchemist

About the author

Michael Thomsett has written more than 50 books, including Mastering Fundamental Analysis (Dearborn), Mastering Technical Analysis (Dearborn) and Getting Started in Options (Wiley). Prior to his writing career, Thomsett worked as a professional accountant and operated his own public accounting and tax consultation business.

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