What is a Stock? A stock is a piece of ownership of a “public” company An IPO (Initial Public Offering) takes the company “public,” meaning that we can all invest in the company if we want to Stocks are traded on the open market We can buy a share from a stock broker When you own stock, you are considered a “shareholder” You share in the company’s profits Unfortunately, you may share it’s losses as well There are different classes of stock Common Stock – accessible to the public Preferred Stock – mostly for officers of the company, sometimes available to the general public

Common Stock Most US stock is common - some stocks pay dividends (earnings shared with investors) If one stockholder owns more than 50% of the company’s shares, they are a majority stakeholder  This means they can influence company business decisions Bill Gates is not a majority shareholder of Microsoft  He owns 277,992,934  That’s $13,249,143,  How many figures is that? 11 – meaning $13 B-B-B-Billion  This information must be available to the public according to SEC regulations  You can find it in Yahoo Finance under “Major Holders”

Fun Facts Stocks of solid corporations are called “Blue Chips” They typically pay regular dividends The name is derived from poker  The blue chips in a poker game are the most valuable Which companies are considered to be blue chip?  Typically all 30 companies on the Dow Dividends are payments to shareholders Companies that are consistently profitable tend to raise their dividend payout periodically This means a higher return for the investor

Voting Rights Common stockholders get voting rights Public companies are run by a “Board of Directors” As a shareholder, you get to vote on who becomes a member of the Board on a form called a “Proxy” Board members may be employees or officers of the company They can also be CEO’s from other firms A Board member can make $100,000 or more plus traveling expenses per meeting They meet every month To be elected, you must be experienced, successful and well-connected

Who’s Who? To find out who is on Alcoa’s Board, look up the Insider Roster - under their name will be their title Look for “Director” - I found Patricia F. Russo She’s the “retired” Chairman and CEO of Alcatel Lucent Before that she was President and COO of Kodak She’s also a Director for Schering-Plough and GM She’s #13 on the Forbes 100 Most Powerful Women in the World I guess she must be successful and well-connected!

Food for Thought What is it a sign of when Directors are selling their stock? What could you infer from a Director buying stock? What else should an investor be reacting to? Let’s start making a list of what affects stock prices