Can I Own Stock??? Anyone can own stock Approximately 50% of the US Population own stock. –This stock can be in the form of Shares of Stock, Mutual Funds, or insurance investing
Can I Purchase The Stock of Any Company? NO! a company must be a PUBLIC CORPORATION in order to trade stock. –company whose stock is traded on the stock market There are over 15,000 publicly held corporations.
How Do I Purchase Stock?? Shares of stock are classified into two categories –Common –Preferred
Common Stock With common stock, the shareholder owns a piece of the company, or a share of the company The more owned, the more ownership or voting power. As a common stock shareholder, the owner: –Profits when the business profits, but loses when the business loses –Has a say in major policy decisions
How Do I Know What Company’s Stock to Buy?? Companies are classified into several different categories.
Income v. Growth Income Stock –Used as a source of income –Consistent histories of yearly profit Growth Stock –Long term investment –Reinvest profits back into the company
Penny v. Blue Chip Penny –Less than $5 a share –Highly speculative – can grow or lose all value –Issued for companies with “Hot” product or service Blue Chip –Large, well established usually profitable businesses
Defensive v. Cyclical Defensive –Remains stable at all time –Makes money during economic decline Utilities, drug manufacturing, food, health care Cyclical –Does well when economy is stable and growing –Does not do well in a recession Airlines, travel
Researching It is wise to research the company and the performance history of it’s stock. –Read the newspaper –Surf the Internet –Talk to people –Watch the stock channel or nightly news
How Do I Make Any Money? Dividends –When a company makes money, they share the profit with their shareholders Appreciation –By holding the stock for a period of time and then selling the shares at a profit.
Why Does the Price of My Stock Change??? Company’s performance and earning power. Interest rates – when rates are low, it is safer to invest Popularity of the industry, product, or service Basic supply and demand National and world events
Gains and Losses Capital Gains –Money made from the sale of stock Price of stock when sold minus price of stock at purchase Capital Loss –Money lost from the sale of stock Price of stock at purchase minus price of stock when sold
The Bear vs. The Bull The Bear Market –Pessimism in the market –Poor economy –Stock is sold –Usually short, but savage The Bull Market –Rising prices –Optimism in the market –Good economy
Who the Heck is Dow Jones?? Actually, it’s not a person at all It is a group of blue chip companies whose daily average performance dictates the market’s performance When the TV networks say “the market is up today” they are generally referring to the Dow.
Where Is Stock Traded?? On a SECURITY EXCHANGE –A marketplace where brokers buy and sell securities Three major exchanges –New York Stock Exchange (NYSE) –American Stock Exchange (AMEX) –NASDAQ – Technology Stock Only
Stock Split Occurs when a company wishes to issue more stock on the market Current shareholders receive twice as many shares and the price is split in half.
Researching and Investing Use Yahoo Finance to research your stocks Students will research 8 companies and based on their findings will choose 5 Students will be giving $100,000 to invest A 2% commission is charged on the purchase No trading will take place after the initial purchase A class portfolio will be set up on Yahoo Finance Weekly updates will be given