1.  Investors – those who buy stocks for a safe, steady return in the form of dividends and/or capital gains.  Speculators – those who tend to take risks with their investments in the hope of making a big and quick return on their money  Ex. Investing in an unknown new corporation.

2. 1) Income Stock – Stocks of companies whose dividends are relatively large and stable. 2) Growth Stocks – Stocks of corporations that retain most of their earnings. 3) Emerging Stocks – Refer to new corporation’s stocks

3. 4) Blue Chip Stocks – Stocks of corporations that have been profitable throughout the years and that have a history of paying dividends at regular intervals. They have a national reputation for quality and reliability. They have the ability to operate profitably in good and bad times.

4. 5) Cyclical Stocks – Stocks of corporations that tend to parallel the cycles or swings of the economy.  Ex. Housing, automobile, and airline industries. EconomyCyclical Stocks

5. 6) Defensive or Staple Stocks – Market value doesn’t get hurt as badly when economy goes down.  Ex. Food, pharmaceutical companies.

6. 7) Penny Stocks  Stocks whose prices are less that $1  Considered very risky  Part of OTC – can be found on pink sheets  Pink Sheets – listing of stocks printed on pink paper and published every day.

7. Stock Market Psychologist – An investor who understands the emotional highs and lows of the stock market.  Ex. Rumors, opinions, fads can all send the market up or down. Dollar Cost Averaging – Investment strategy in which an investor buys the same stock with the same amount of money at regular intervals for a long period of time.

8. Stock Dividend – A dividend that is paid as additional stock rather than as cash. Stock Split – The lowering of the stock price by issuing more shares to current shareholders.  Ex. 2 for 1 You had 1 share at $100 Now, you have 2 shares at $50 Possible reason for a stock split: Lower stock price will attract more investors.

9.  Institutional Buying - Is the purchasing of a large block of stocks by an institution rather than by an individual investor.  Ex. Insurance companies, banks, mutual funds.  Buying and selling stocks in such large blocks can dramatically affect the price of stocks.  Ex. Cause of the Oct. 1987 crash; DJIA plunged 508 points in a matter of hours

10.  Buying on margin – Investor purchases stocks with money borrowed from a broker.  Up to 50% off purchase price.  Margin Account – Minimum $2,000 account opened with broker in order to buy on margin.  Used as collateral.  Leverage– Borrowing money to make money

11.  Crash of ‘29 – Stock market crash that was brought on, in part, by no set requirements for buying on margin.  Crash of ’87 – Stock market crash that was brought on, in part, by large institutional buying.