AGENDA Tues 3/13 & Wed 3/14 AND Thurs 3/15 & Fri 3/16 Walmart conclusion QOD #21: Eenie-meanie-minie-moe Review Market Org Quiz Review Stock Market Game Stock Markets Wizards of Wall Street Midterm Review HW: pg 631 #1-5 DUE: Thurs 3/15 & Fri 3/16 Stock Watch: Portfolio Printout #2: DUE 3/19 & 3/20 Study for Midterm Mon 3/19 & Tues 3/20

QOD #21: Eenie-meanie-minie-moe Some might advise that in order to be a wise investor, one should tend to avoid complex investments that they do not fully understand. Explain why you agree or disagree with this advice. What would be the advantage to ignoring the advice? What would be the advantage to heeding the advice?

What are Stocks? A stock is a claim on the assets of a corporation that gives the purchaser a share in the corporation. A dividend is a payment from the corporation to the shareholders. It is the portion of corporate profits. When a corporation earns a profit or surplus, that money can be put to two uses: re-invested in the business paid to the shareholders as a dividend Stock exchanges where stocks are traded.

New York Stock Exchange (NYSE) 11 Wall Street, Manhattan, New York (a.k.a. Broad St.) Started as a meeting of 24 men in 1792 Became NYSE in ,366 membership (seats) Must be a member to trade stocks listed w/ this exchange Membership seats may cost as much as $2 million. 3,600 of the largest, most profitable companies

National Association of Securities Dealers Automated Quotations (NASDAQ) Established in 1971 Electronic stock market (over-the-counter) 3,800 companies Trades more stock shares than NYSE

American Stock Exchange (AMEX) Started in 1842 on the curb near Broad Street Traders started using hand signs to communicate 1921 moved indoors 1953 called the New York curb Exchange Traded more speculative stocks Penny stocks 1998 AMEX merged with NASDAQ NYSE Euronext acquired AMEX in 2008 In 2009, renamed to NYSE Amex Equitties

Dow Jones Industrial Average (DIJA)  Referred to as the “Dow”  Developed in 1896 by Charles Henry Dow who took 11 stocks and summed their prices.  Average today is not a simple computation but a special formula to avoid certain distortions in the market.  Today the DOW consists of 30 stocks.  The DOW is devised to convey some information as what is happening in the market and to avoid rumor.

Indexes that cite stock information  DOW  Standard & Poor’s (S & P)  NASDQ composite  Hang Seng- Hong Kong  Nikkei 225 in Japan  Shanghai Composite in China

How does the stock market work? Stocks are sold by companies wanting to raise money. People invest in companies by “buying” stock.buying Usually requires an initial deposit into account ($ ) The first offering of stock to the public is called and initial public offering (IPO). Stock prices rise and fall according to demand and supply.

Benefits of stocks? Dividends- payments in the form money from the share of profits a corporation has distributed to the stockholders. $$$ stocks are an investment for the long-run. Money should not be borrowed to invest.

Richest person in the world? Who is the richest person in the world? Who richest Bill Gates Warren Buffet Mukesh Ambani Lakshmi Mittal Carlos Slim Helú

#1 Carlos Slim Helú- investor Began investing in stock & real estate VP of Mexico’s stock exchange Purchased TELMEX Privatized Mexico’s telephone company Est. net worth - $69 billion

#2 Bill Gates—Entrepreneur Former CEO of Microsoft (2000) Chairman of Board, owning 8% (largest stockholder) Heads Bill & Melinda Gates Foundation (2008 left Microsoft duties) Est. net worth = $61 billion

#3 Warren Buffet- investor He is the CEO (Chief Executive Officer) and largest stock holder of Berkshire Hathaway. He will gradually give away 85% of his money to the Bill Gates foundation. "I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing.“ Est. net worth = $44 billion

Dow Quiz How many people formed the original company of Dow Jones? How many people formed the original company of Dow Jones? How many stocks were listed in the original index? How many stocks were listed in the original index? What was the publication that included the Dow Jones index? What was the publication that included the Dow Jones index? What was one of the outside forces discussed that had an impact on the stock market? What was one of the outside forces discussed that had an impact on the stock market?