1. Money Management & Stocks Meeting #2: 13 September 2005

2. Agenda Re-Statement of Club’s Mission Why Investing is Important Basic Money Management How to Analyze Stocks Guests: Mr. Kirby & Mr. Prokop Sector Sign-Ups

3. Investment Club’s Mission: 1. Educate Cadets regarding Investing and personal financial planning 2. Maximize returns on the Spragins Fund

4. We’re here to turn this…

5. Into This!!!

6. BLUF of Money Management:  Start saving your money early  Make wise financial decisions  Have a Budget  Know the Tax Code (website)  Help your Soldiers

7. A quick Cow Loan example  Maxing out your Roth IRA with only your Cow Loan  Earn 10% compounded annually  Equals $1,770,316.88 @ 65  Or $2,851,113.04 @ 70

8. A more Lucrative example  Maxing out your Roth IRA till age 65 (marry at 26)  Earn 10% compounded annually  Equals $6,104,684.41 @ 65  Start withdrawing $600,000 per year @ 66  You’ll have $8,941,887.22 @ 100 still in your account earning interest

9. Compounding Interest Rates “What is ze most powerful force in the universe?” Compound Interest!

10. Buying a Car  I can buy a $30k Jaguar or stick with my Honda  Perform a Cost/Benefit Analysis  The Jag actually costs me $70k  Is a new Jag going to give me $70k worth more of personal joy than my Honda? No. Go with the Honda.

11. Create a Budget  Extremely important after Graduation  You’ll be tracking more than a dozen monthly expenses  Form good habits now  Some of you will be amazed at where all your money goes  A budget Now will create good spending habits

12. Sample Financial Plan

13. Helping your Soldiers w/ their $$$  AVOID Payday Lenders (see link) Cause a “debt trap” You’re the first line of defense  Educate yourself  More Importantly, know who to refer them to before a problem All Posts have rarely used but high quality people who can help  Show them these slides (bonuses)

14. What is a Stock?  A Stock (Certificate) represents a small slice of a company that can be bought and sold.  Companies “go public” to raise money; they will never again get money from investors after the IPO (Initial Public Offering).  P/E Ratio and Market Capitalization  Investors hope their company increases its earnings and either reinvests them in the company to increase future earnings or pays them a dividend.

15. Growth Investing  Find the next MSFT or WMT  Look for continuing earnings growth  They have higher “trailing P/Es” But lower “forward P/Es”

16. Value Investing  Find a MSFT or WMT that is currently trading at a discount  Make sure of sound fundamentals  Contrarian Investing

17. Next Time  How to start investing (or make better investment decisions) Setting up an IRA Analyzing Mutual Funds Risk Tolerance and Goals Diversification and Asset Allocation

18. QUESTIONS???

19. Guest Speakers Questor Management Company  Mr. Kevin Prokop Director  Mr. Dennis Kirby Vice-President of Private Equity

20. Sector Sign-ups Prepare to Work! (min of 4-5 hours)  Technology Giles EvansE-3  Energy James McCrayC-3  Consumer Goods David MaroldB-1  Healthcare Bryan SpencerA-4  Financials John HowieH-1

21. Screening Criteria  1. Minimum Price per Share $5 (has to do with listing requirements and whether or not institutional money can invest in stock)  2. Price to Sales maximum 5  3. Inside Ownership Minimum 1% (management has some stake in the company)  4. Institutional Ownership Minimum 15% (does smart money invest in this company)  5. Price to Earnings maximum 50 (although we prefer something more reasonable compared to sector averages you'll see on Quicken)  6. Price/Earnings to Growth (PEG) < 1.0 (is the market pricing the stock to fully reflect the stock's EPS growth?)  7. EPS minimum of $0.01 (this eliminates companies losing money)  8. Total Revenue minimum $50 million (so it is not a mom and pop store)