2. LAP: QS-045 Investments

3. Objectives Discuss strategies for selecting investments. Explain the strategy of diversification.

4. Discuss strategies for selecting investments. Objective

5. You can make the right investment choices on your own.You can make the right investment choices on your own. Knowledge will help you make wise investment decisions.Knowledge will help you make wise investment decisions. Knowledge

6. Invest wisely by following some simple investing strategies: Strategies Invest for the long term.Invest for the long term. Invest in growth stocks.Invest in growth stocks. Invest regularly.Invest regularly.

7. Stay in the market for a long period of time.Stay in the market for a long period of time. Consider the risk/return tradeoff.Consider the risk/return tradeoff. Benefit: significant growthBenefit: significant growth Avoid these pitfalls:Avoid these pitfalls:  “Herd mentality”  “Recency bias” Invest for the Long Term

8. Characteristics of growth stocks:Characteristics of growth stocks:  Appreciate steadily over time  Carry a moderate-to-high risk  Bring a moderate-to-high return Invest in Growth Stocks stocks Companies that offer growth stocks:Companies that offer growth stocks:  Large-cap (over $8 billion)  Mid-cap (between $1 billion and $8 billion)  Small-cap (less than $1 billion)

9. Company executives put money back into the firm.Company executives put money back into the firm. Sales and EPS grow at a rate greater than that of the market.Sales and EPS grow at a rate greater than that of the market. Quality growth stocksQuality growth stocks  Solid fundamentals  Long-lasting companies Benefit: steady growth over a long period of timeBenefit: steady growth over a long period of time Invest in Growth Stocks

10. Make it a habit.Make it a habit. Use dollar cost averaging.Use dollar cost averaging. Invest Regularly Reinvest dividends.Reinvest dividends. Benefits: greater earnings and compounded interestBenefits: greater earnings and compounded interest

11. Explain the strategy of diversification. Objective

12. Spreading out your investments to minimize risk Diversification

13. By type—stocks or bondsBy type—stocks or bonds Ways to Diversify stocks Savings Bond By sector/industryBy sector/industry By cap-size—large, small, or “mid”By cap-size—large, small, or “mid”

14. Update your portfolio: Maintenance When you changeWhen you change When the company’s fundamentals changeWhen the company’s fundamentals change Rebalance as portfolio becomes more aggressive.

15. Growth investing—good strategy? Walgreens vs. CVS Management decisions and company fundamentals It’s Fundamental Quick Case

16. MarkED Acknowledgments Original Developers Christopher C. Burke and Mary C. Hollaway, MarkED Version 1.0 Copyright © 2007 MarkED Resource Center

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