1. The Stock Market

2. What is a stock?
A share of a stock represents ownership in a corporation
When you buy stock in a corporation you become a part- owner or a stockholder (shareholder)

3. What does being a shareholder get you?
You immediately own a part, no matter how small, of every building, piece of furniture, machinery, etc.
You stand to profit when the company profits
You are legally entitled to a say in major policy decisions, such as when to issue additional stock, sell the company to outside buyers, or change the board of directors

4. What does being a shareholder get you?
Each share has the same voting power, so the more shares you own, the greater your power
You can vote in person or by attending the corporation’s annual meeting
Or you can vote by using an absentee ballot, called a proxy

5. How do investors make money?
The better a company does and the higher its profits, the more money its stockholders make
Many companies parcel out portions of their annual profits to stockholders in the form of quarterly dividend payments

6. Dividends
Stocks with consistent histories of paying high dividends are known as income stocks because investors often buy them for the current dividends rather than for the future prospects
Some companies reinvest most of their profits back into the business to expand and strengthen it. As a result companies that pay little or no dividend are called growth stocks because investors expect the company to grow

7. Blue Chips e

8. Types of Stocks Common Stock Preferred Stock
Issued after common stock has been issued
Preferred stockholders receive preferential treatment
Dividends are distributed before being distributed to common stockholders
If the company should go out of business and sell its assets, liquidation, preferred holders are entitled to receive more than they have invested before common stock holders receive theirs
In exchange they agree to a fixed dividend payment regardless of an increase in company profits
First type of stock to be issued
Represents basic ownership of a corporation
Owners share directly in the success or failure of the business

9. Issuing New Stock
The first time a company’s stock is issued the company is said to be going public
Owners are selling part ownership to the general public
Formal name for the process is initial public offering (IPO)
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10. Issuing New Stock
When a company goes public, the financial community is notified through ads, commonly known as tombstones because of their traditional black border and heavy print

11. Number of shares
Name of company
Type of issue
Market value of the stock, the price of the shares upon their first offering to the public is the initial offer
Prospectus: must, by law, be available to anyone interesting in investing. Provides detailed financial info not given in the ad
The underwriters are the investment bankers who handle the offering
Disclaimer: required to announce ad

12. Tombstone Directions
In order to calculate the # of shares available you must:
Use your loan amount as your liquidation value
Choose an IPO between $1-$10
Divide the liquidation value by the IPO to get the current amount of shares available (round to nearest 100)
LV = # of shares for sale
IPO

13. Now what?
Buying stocks
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14. How to Pick Stocks Fundamental Analysis Technical Analysis
Involves appraising a company’s financial condition and management
Industry’s competitive position
Ignores fundamentals and instead uses charts based on past performance to identify price trends and cyclical movements of particular stocks, industries, or the market of the whole

15. Bull and Bear Market