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Welcome to the Investing for Beginners podcast. In today’s show, we discuss:
Andrew discusses the ins and outs of derivatives, how they work, and their potential impact on companies and your investments
Dave and Andrew discuss their thoughts on investing in Tobacco, and other similar investments such as utilities and oil
Andrew talks about dollar-cost averaging (DCA) and how to use it to its full potential
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Dave: [00:00:00] Welcome to investing for beginners podcast. Today, we have episode 202 tonight. We are going to return to answer some great listener questions we got recently.
So without any further ado, I’m going to go ahead and jump in and read the first question. So I have a good morning; if you don’t usually answer questions like these, sorry for taking up your time. I’ll get to the point. A mutual friend of mine recommended it. Take a look at JUSHY J U H J U S H F. The stock meets zero of your prerequisites dividends, cash flow positive market cap, et cetera.
But I have a question about their financial statements located on SEDAR operating income for 2020 was negative 92 30. But a fair value change in derivatives of negative, 173,707 drops net income to a negative 1 92, 2 33 further derivative liabilities account for over half of their total liabilities.
I cannot find any information about these derivatives and why there is such a large part of the business. Professor Google and their annual report have not yielded much. Is there somewhere else you recommend working, or could you explain why companies generally use derivatives? The whole thing confuses me.
Thank you so much. Liam. Andrew, what are your thoughts on Liam’s really good question. I’m curious to know, too, because I’m not super up on derivatives myself.
Andrew: [00:01:20] Yeah. It’s one of those where. Derivatives are basically like options, so if you want to go back and listen to the episode, we just did with Cameron.
And that could be a good primer for talking about different sorts of options. In his case, he was talking about puts, we have called, and you have putts. So options are derivatives, but a derivative doesn’t always have to be an option, but, we saw with the great financial crisis, what can happen with Really messy. And we saw it more recently with the art arch to if I knew how to pronounce or take us, I think that’s it. Yeah. I PR well, we still bet drain it, but the Archegos goes thing. You had a lot of derivatives exposure. And so it’s just one of these weird things and, I don’t know why that’s the case.