Ticker Symbols and Stock Quotes Mr. I

Ticker Symbols To buy or trade a stock, a person must know the ticker symbol for the stock, mutual fund, or ETF. Stocks listed on the NYSE typically have 1 to 3 letters Stocks listed on the NASDAQ typically had 3-5 letters You can look up stock quotes and symbols on google and many other financial websites

Vocabulary P/E Ratio: Stands for price-to-earnings ratio. The P/E is the relationship between a company's earnings and its share price. It is calculated by dividing the current price per share by the earnings per share. Volume: The number of shares traded in a company's stock. Unusual market activity, either higher or lower than average, is typically the result of some external event Share: A share is a unit of ownership in a corporation or mutual fund

Rights and Responsibilities as Stockholder Owners of common stock have the right to all non-patented information about the company. In fact most corporations have corporate customer relations departments to provide information to and hear from investors. (Don’t need to know this-don’t write this) They also have the right to a share of the profits of the corporation in the form of dividends They have the right to vote for the members of the board and vote and issues coming before the board. Have the right to learn about board members and various issues that are going to come before the board. They have the right to submit their own proposals. Shareholders also have the right to sell and buy shares anytime

What is a Company? A company is a business or an association that is setup to manufacture, refine, or supply services for a profit. Can be : 1) A partnership – between 2 people 2) A Limited Liability Partnership (LLP) – Much of the profit and loss is transferred from the partners to the partnership owners. 3)Corporation – Can be private or public. Company is broken up into stockholders who share in the profit and losses of the company. 4) Single Owner – Baller Status ?? Owns their own business

Public Companies A public corporation is a company with publicly traded shares that anyone can buy in a stock market. A public corporation is also legally separated from the stockholders who own it and the managers who run it. A corporation offers these advantages: • Stockholders’ are not responsible for the company’s debt; • A corporation continues to exist even if its stockholders or managers change; • Stockholders can easily sell their ownership shares through the stock market. Public companies are run by a CEO- Chief Executive Officer (Makes this big $), the finances are run by the CFO – Chief Financial Officer

Private Companies A private corporation may be owned by an individual or privately sell stock to fund the business. The partners in the company are called shareholders. They receive shares for their contributions to the business. Shareholders have ownership and some decision making power in the company. The company does not sell shares to the public; you cannot buy shares of a private company on the stock market.

Difference in Investing in Public and Private Companies If you are investing in a public company, you need the share price to increase over time and possibly to receive a dividend. For a companies share price to increase the following must happen: Earnings per a share increase Revenue increases Gross Margin Increase Other Metrics – All of the above relate to the companies GROWTH or ability to INCREASE DIVIDENDS. Private companies on the other hand just need to make a profit that it can then split between its shareholders.

What is the DOW? Stands for Dow Jones Industrial average The Dow is comprised of 30 of the largest companies in the U.S. across a range of industries except for transport and utilities. Known as BLUE CHIP stocks – suppose to be very stable criteria for a company to get on the Dow is vague; the companies are leaders in their industry and very large. The components in the DJIA do not change often as it takes an important change in a company for it to be removed from the index If the index comes up for review, the Wall Street Journal editors often replace more than one company at a time. (Don’t write this)

What is the S&P 500? 500 largest companies throughout a variety of industries Based on following criteria : Market Cap of over 5 Billion 4 Quarters of continuous profit Adequate liquidity Public Float of more than 50% - (Public Float – number of shares available for public to trade)

Russel 2000 An index measuring the performance approximately 2,000 small-cap companies serves as a benchmark for small-cap stocks in the United States. The weighted average market capitalization for companies in the Russell 2000 is about US$1.3 billion  The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 10% of the total market capitalization of that index. The Russell 2000 is constructed to provide a comprehensive and unbiased small-cap barometer and is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set.

Russel 1000 The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe.  It is a subset of the Russell 3000® Index and includes approximately 1000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the U.S. market.  The Russell 1000 Index is constructed to provide a comprehensive and unbiased barometer for the large-cap segment and is completely reconstituted annually to ensure new and growing equities are reflected.

Russel 3000 The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.

What is the use of these Indices? They show people at a glance how the overall market is doing. You can track sectors and make trades accordingly. (See what is working and what is not) Modern day trading is mostly done by buying baskets of stocks, called ETF’s and Mutual Funds. These are made and traded based on these indexes. For instance if the Dow goes down 1% in a day, these funds like the iShares Dow Jones U.S. ETF (IYY) would be down about 1% roughly based on their holdings of the Dow. http://money.usnews.com/funds/etfs/large-cap-funds/ishares-dow-jones-u.s.-etf/iyy