Causes of stock price Fluctuations

How do you grow your money Cash into a savings account Cash into a savings account Mutual funds - An investment vehicle that is made up of a pool of funds, securities such as stocks, bonds, and money markets. Mutual funds - An investment vehicle that is made up of a pool of funds, securities such as stocks, bonds, and money markets. Certificate of deposit – place amount of money in the bank then earn a specific amount of interest after a predetermined time Certificate of deposit – place amount of money in the bank then earn a specific amount of interest after a predetermined time Bond – guaranteed money after a specific amount of time Bond – guaranteed money after a specific amount of time Stock market – significant growth can be expected over a long period of time Stock market – significant growth can be expected over a long period of time

Temptation As a long term investor, you don’t want to get caught up in day-to-day stock prices. As a long term investor, you don’t want to get caught up in day-to-day stock prices. The media and the I-net may make it tempting to sell. The media and the I-net may make it tempting to sell. The recent economy could scare some with: job loses, inflation, record breaking oil prices, declining home values The recent economy could scare some with: job loses, inflation, record breaking oil prices, declining home values

Factors affecting stock price fluctuations When investors expect companies to grow – they will purchase stocks When investors expect companies to grow – they will purchase stocks Supply and demand – the more popular in demand stocks are the higher price stocks Supply and demand – the more popular in demand stocks are the higher price stocks Bull market – when stock prices are rising and manufacturing is growing Bull market – when stock prices are rising and manufacturing is growing Bear market – stock prices are declining and manufacturing is declining Bear market – stock prices are declining and manufacturing is declining Volatility – compares how much “rollercoaster” action a stock demonstrates Volatility – compares how much “rollercoaster” action a stock demonstrates

What brings value to a stock Earnings projections – every quarter a business predicts how much it will earn the coming quarter Earnings projections – every quarter a business predicts how much it will earn the coming quarter New products New products New management New management Change in business model – the way a company does business - Krispy Kreme in grocery stores, Mc Café Change in business model – the way a company does business - Krispy Kreme in grocery stores, Mc Café Acquisitions – when one company buys another, the acquired company sees the stock price increase Acquisitions – when one company buys another, the acquired company sees the stock price increase What the analysts say What the analysts say Being added to or removed from an index (S&P) Being added to or removed from an index (S&P)

Outside forces affecting company’s stock price When the industry is growing as a whole When the industry is growing as a whole The economy – during tough economic cycles, people tend to shy away from stocks -People do not have the discretionary income available The economy – during tough economic cycles, people tend to shy away from stocks -People do not have the discretionary income available Stocks closely tied to the economy – cyclical stocks – home building, cars Stocks closely tied to the economy – cyclical stocks – home building, cars World events - 911, economic crisis, politics, etc. World events - 911, economic crisis, politics, etc.

1. What is a bear market? 2. What is a bull market? 3. Are we currently in a bear market or a bull market? 4. Give some examples in how an investor can grow his or her money? 5. Why is the stock market more risky than other investment options. 6. Why do investors play the stock market when there is the potential of loss? 7. Why is stock purchasing often avoided during a recession? 8. What brings value to a stock? 9. Describe the term volatility. 10. How does supply and demand affect stock prices?