تدريب Shadowing: Financial Assets versus Real Assets | Essentials of Investments | CFA exam | CPA Exam BAR - تعلم التحدث بالإنجليزية عبر الفيديو

Hello and welcome to this session.

This is Professor Farhad in which we would look at real assets versus financial assets.

This topic could be covered in essentials or principles of investment course, undergraduate or graduate level.

This information is covered on the CPA exam, BEC section, as well as on the CFA exam.

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So let's talk about first real assets.

But before we talk about real assets and differentiate between real and financial, what are assets?

And an asset is something that you have to know in details when you study accounting.

The first thing we teach is what is an asset and what is an asset simply put?

Assets or assets are resources.

What do resources do if you have a resource like money?

Well, you can do anything with money.

It help you achieve your goal.

You can start the business with money Once you start the business

and you have money you can buy inventory inventory is a resource

because you can sell them You can buy land you can buy equipment to produce so simply put all

Assets are resources such as cash and cash is the best asset because you can do anything with it.

It's a resource that can help you do anything.

Land, land is an asset building, but with cash you can buy all of those inventory, equipment, knowledge.

Knowledge is an important asset.

In accounting we call it intangible asset

and this asset is extremely important in our economy today because our economy is dependent on technology and most of the

Real assets and technology are intangible, something that you don't touch, you don't see.

We also have other type of assets like investments, such as stocks and bonds.

And we have all sorts of assets, supplies, anything that you can use to produce.

income from is technically an asset this is what assets are

this is the word assets we're not we're not we are not defining whether it's real

or financial we're going to find that in a moment okay

so why are assets important so so why do we have to talk about assets well Think about it,

your wealth, your wealth is dependent upon how much assets you have

if you have money

if you can start a business what you need you need

to buy equipment like for example tesla tesla started with an idea ideas are great i have the greatest idea

but i don't if i don't have manufacturing facilities

if i don't have a warehouse

if i cannot buy the technology to start my business then my ideas are not good

so that's why assets are important because the wealth of the society is determined by its

output so you can take those assets and use them

starting with cash you can start with cash for example Tesla

first they need cash now we're gonna learn about how they

get cash first they need cash with cash they can buy

build they can buy land they can put a building manufacturing facility they can buy equipment they can produce cars

so on and so forth and the wealth of the society will increase

but how do they come up with cash initially this is what we're going to be talking mostly about so

We have two types of assets.

Now we're going to differentiate between the two types of assets.

We have real assets and we have financial assets.

And this is the purpose of the session is to make sure you know the difference between real and financial.

Okay.

What are real assets?

Let's start with real assets.

What you are seeing here on the screen, the cars, the facilities, those are real assets.

So real assets are used to produce goods and services.

What do you need to produce goods and services?

You need equipment.

You need inventory.

You need supplies you need a building, you need a warehouse.

Okay, so they are used to do so.

The real assets, they generate the net income to the economy.

So when the company generated their financial statements, financial statement means how much profit they made.

How did they make the profit?

Well, they produce something or they purchase something, then they resold it, or they produce something, like in the case of the manufacturing, like Tesla, they produce car, then they sell that car.

In case of Tesla, actually they are selling it at a loss, but the point is eventually they hope to sell it at a gain.

But the point is, is you need to produce something, sell it, make a profit.

So the real assets will help you make that profit, that net income okay

and again what are we talking about here we're talking about

land building equipment knowledge is also considered a real asset especially in our economy again it's taken a front line

so every time you think of real assets Don't think of only assets you can touch and see, because knowledge is an asset, is a real asset, but you cannot touch.

It's called an intangible asset, but it's really under the category of real assets as far as we are concerned, 'cause we're gonna talk about the financial assets first.

So think of real assets, the picture that you see in front of you.

Let's talk about financial assets.

What do you think of when you think of financial assets?

Think of stocks and bonds.

So what are stocks and bonds?

Let's talk about financial assets.

And we're going to talk much, much more about financial assets, because when you invest, you don't invest in real asset.

So when you invest in Tesla, you don't buy one of their cars.

if you want to invest in them okay you buy their

stocks you don't buy their equipment you buy their stocks

so what are stocks and bonds well stocks

and bonds are either a piece of paper

or a computer entry most of the time it's a computer

entry you know no one especially tesla they will not give you a copy of the stock certificate

because they don't issue it anymore because it's a costly for them

so it's basically it's a proof that you own something

but it's not really it does it has nothing to so

if you buy stocks and tesla you are not really producing at the control not directly contributing to productivity, but you are contributing tremendously indirectly.

Okay, so what you are doing when you buy stocks and bonds, when you buy financial assets, you have the claim on the real asset or on the income.

So if Tesla makes a profit and you invested in Tesla, Then you can get share in that profit, either if they pay dividend,

if they pay cash, which is, you know, obviously Tesla doesn't pay dividend because they don't have a profit yet.

Or claim on the real estate.

For example, if the company liquidate, if Tesla liquidate and they sell their equipment, you have a claim on the real asset that you will get some money out of it.

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Third, the Tesla stock is trading almost at $900, although they are making no real income, so, but that's a different story.

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We can talk about this later on in the course.

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So how do you invest?

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What is the idea of investing?

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Well, the idea of investing is, think about your education right now.

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You are making an investment.

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What is an investment?

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What's happening is you're sitting in your classroom, or in case of the coronavirus these days, you're sitting home listening to this lecture.

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What you are doing is you are investing in your education.

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Why?

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well you are investing for the future you are delaying your consumption

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because you can do something else with your time you can

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do something else with your money you paid for your course

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and you are investing time

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so rather than paying for the course you can take this money

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and do something else with it not much these days

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if you are still you know in quarantine

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but the point is you can do something else with it

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you can consume it also you talk also your time you are investing your time

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so all what you're doing is you are choosing between consuming what you have today or investing for the future.

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So this is the idea of investing.

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It's a delayed gratification, delayed of consumption.

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And education is the best way to think about it.

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What you do is you are paying money today.

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You are spending time.

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in the for the hope of making more money into the future

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so that that's that's what an investment is you invest today

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so today every time you invest you start with negative

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because you don't invest with positive

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when you start your investment you have to pay money

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and how do you pay money you buy stocks

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and bonds excellent as an investor you buy stocks and bonds you buy stocks and bonds of tesla

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When Tesla issues stocks and bonds, when they sell stock and bonds, you buy them.

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Now, what do Tesla do with that money?

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Now, simply put, you gave your money to Tesla.

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You gave your money to Tesla, not when you buy the stock today, when they actually issue stocks.

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If you buy the stock today, you're buying it from someone else in the secondary market.

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You give the money your Tesla.

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and Tesla give you a piece of paper called "Stop." So what do Tesla do with this money?

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The company will buy, plant equipment technology inventory so the real return of investor is from the real asset

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so when you invest all what you're doing is you're giving them your money the proceeds

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You're giving them the proceeds and with the proceeds, the proceeds usually invest.

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You would invest cash.

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We're talking about large companies.

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And what they do is they buy those assets that they need.

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They buy the real asset.

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So what happened is now you are hoping that the real assets are producing net income.

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Which in turn, if they are producing their income, if they are producing profit, you are going to benefit from this profit.

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How are you going to benefit?

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In one of two ways.

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Either the stock of Tesla goes up, which called capital appreciation, or Tesla, you remember you invested and they make a profit, they pay you dividend.

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Not Tesla doesn't pay dividend now, and we'll talk about dividend later on much more in details, but the point is you share in that profit,

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but Tesla stock is going up for the past few years.

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Now, so the financial asset performance is dependent upon the real asset performance.

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Although that's the case, although the real asset performance is what matters, we don't study the real asset performance.

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What do I mean by studying the real asset performance?

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It means going to the manufacturing facilities at Tesla and determining how efficient is a machine reproducing cars.

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You can do that.

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cash flow statements and Your profit will be dependent on that.

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So we're going to focus on financial asset as a reflection of the real asset

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because you cannot really measure the real asset performance.

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Measure it as an investor.

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You see that performance in the financial statements.

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That's why we focus on financial assets.

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And here's a picture of the balance sheet of U .S household just to give you an idea.

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How much financial assets do we hold?

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How much real assets do we hold?

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For example, real assets.

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and this is march 2017 from the uh from the uh

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board of governors of the federal reserve system just it's a snapshot

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so it's not you know the numbers might be different today

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for example just to get an idea 20 25 of our

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assets are are in real estate you know five percent

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and can consume consume consumer durables um let's see pension reserve 20 corporate equity 14 just to give you an idea

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And this is our liabilities, mostly in mortgages, credit cards, so on and so forth.

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This is the balance sheet of U .S household.

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Just to give you an idea how much real assets or financial assets.

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Now, bear in mind, for example, if the stock market crash, the corporate equity value will go down.

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And also if the real estate crash too, like what's happening these days with the coronavirus, no one knows the outcome of this.

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real property, then obviously the value,

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the balance sheet value of the U .S household will be less invested in real estate.

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In the next session, what we'll focus on is actually financial assets, because this is what matters for investors, financial assets.

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As always, I'm going to invite you to like this recording, share it, put it in playlist.

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If it benefits you, it means it might benefit other people.

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And don't forget about my website, especially if you're trying to supplement Study hard, good luck.

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And if you are still going through this coronavirus, Stay safe.

ما هي تقنية التظليل الصوتي؟

التظليل الصوتي (Shadowing) تقنية تعلم لغة مدعومة علمياً، طُورت أصلاً لتدريب المترجمين الفوريين المحترفين. الطريقة بسيطة لكنها قوية: تستمع لصوت إنجليزي أصلي وتكرره فوراً بصوت عالٍ — كظل يتبع المتحدث بتأخير 1-2 ثانية. تُظهر الأبحاث تحسناً كبيراً في دقة النطق والتنغيم والإيقاع وربط الأصوات والاستماع والطلاقة.

تدريب Shadowing: Financial Assets versus Real Assets | Essentials of Investments | CFA exam | CPA Exam BAR - تعلم التحدث بالإنجليزية عبر الفيديو

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