JA Take Stock In Your Future

What do I do? 

$1 million dollars

Who are these millionaires? Where can we find them? What do they look like? What do they do? How can we become one?!

THOMAS J. STANLEY, Ph.D and WILLIAM D. DANKO, Ph.D decided to look for them. Guess where they found them?

Chapter 1 “These people cannot be millionaires! They don't look like millionaires, they don't dress like millionaires, they don't eat like millionaires, they don't act like millionaires - they don't even have millionaire names. Where are the millionaires who look like millionaires?”

PORTRAIT Of A MILLIONAIRE Many of the types of businesses we are in could be classified as “dull or normal”. We are welding contractors, auctioneers, rice farmers, owners of mobile-home parks, pest controllers, coin and stamp dealers, and paving contractors.

PORTRAIT Of A MILLIONAIRE We live in homes currently valued at an average of $320,000. We live well below our means. We wear inexpensive suits and drive American-made cars. Only a minority of us drive the current- model-year automobile

PORTRAIT Of A MILLIONAIRE 83% of us went to a public high school. We are fairly well educated. Four out of five of us are college graduates.

PORTRAIT Of A MILLIONAIRE We invest nearly 20% of our income each year in transaction securities such as publicly traded stocks and mutual funds.

PORTRAIT Of A MILLIONAIRE 79% percent of us have at least one account with a brokerage company. But we make our own investment decisions.

Three different types of companies we can invest in 1)Sole proprietorship 2)Partnership 3)Public Corporation

Sole Proprietorship A sole proprietorship is a company owned by a single individual. There are no shares of stock.

Farrah Gray When he was 10 Gray formed a club that raised $15,000 for financing a lemonade stand, and became a self-made millionaire by the age of 14.

A partnership A partnership is a company owned by more than one individual, and there are no shares of stock.

Snooki launches her own line of flip-flops, sunglasses & suntan lotion

Private Companies Pros Greater control over the company More personal profits Don’t have to please external shareholders Cons Reduces ability to raise money for expansion or improvement Owners would have to use their own money, borrow from a bank or use the profits to expand/improve

We need more money! Used our own money Used our partners money Used all of our profits But we still have creative ideas, projects, expansion goals etc. Let’s go public!

Public Companies Pros Increase ability to obtain money for expansion, conduct research, and purchase equipment Increase exposure which is great for marketing our company Cons Less individual profit Financial statements available to the public

Initial Public Offering - IPO Let’s sell individual shares of ownership in our company to the public We will call these individual shares stock

We can sell our new shares on the Stock Market Exchanging of stock is usually done electronically One of the last stock exchanges that still offers face-to-face trades is the New York Stock Exchange (NYSE)

Two types of markets Bull Market Prices are going UP Bear Market Prices are going DOWN

Stock Indexes Stock indexes measure the performance of the overall stock market A stock index (or average) is a group of companies in different industries whose performance represents the market trend and is tracked to gauge the movement of the market The most quoted stock index is the Dow Jones Industrial Average, which is a group of 30 companies in different industries traded on the NYSE

Some of the 30 Dow components