1. Introduction to the Stock Market
The Basics of Stock Investing

2. Types of Investments (4-Asset Classes)
Stocks
Real Estate
Bonds
Cash Accounts
Checking account, CD’s, money markets

3. Why Companies Issue Stock
To raise financial capital to expand & run business
Companies can also issue bonds to raise financial capital
Investment Banks help companies issue stock & bonds

4. Holding Period
The longer the holding period----the more risk you should take
Stocks are a long term investment
minimum 5-year holding period
A diversified portfolio should own at least 15 different stocks
often stock indices are the best way to accomplish this

5. You can invest in indices
Key Stock Indices
S&P 500 Index
Largest 500 companies by $ value
Dow Jones
30 very large American companies
Nasdaq
primarily technology stocks
indices track
the performance
of a large # of stocks
You can invest in indices
through index funds
and ETF’s

6. BULL or BEAR MARKET? . .

7. Sectors of Stock Market
Industry Type
Sectors of Stock Market
Technology
Transportation
Retail
Financials
Energy
Health Care
Defense
New Industries (looking to the future…)

8. What is company worth?
Company A
Company B

9. 2 Goals of a Company 1) Maximize Profits (each year)
2) Grow Profits (over time)
Companies that grow
PROFITS
the fastest
have the best
stock performance

10. Growth Rates P.E. ratios reflect GROWTH rate expectations
The HIGHER the P.E. => the FASTER the market expects Profits to Grow
Below 10 P.E. => considered low
Called a “value” stock
Above 35 P.E. => considered high
Called a “growth stock”

11. Today’s
Stock market
PE = 15
SP500 Average PE is 15

12. Yahoo for analysis