Stock Market Basics

Amazon and Walmart are two of the largest retailers in the world today Amazon and Walmart are two of the largest retailers in the world today. While both started out as a small business owned by one person, today they are large corporations owned by many investors. How is this possible?

Corporation: A specific legal form of business that has a board of directors and shareholders. Businesses of all sizes can be incorporated. Board of Directors: A group of people selected by the shareholders to provide oversight to a corporation. Shareholders: Individuals who own “shares” or “stocks” in a corporation.

What are Stocks? How can someone buy shares in a company? If the company is publicly-owned- stock is bought and sold through stock markets. Privately-owned stock is bought and sold by the company itself. Stock is ownership in a publicly traded company. Stock is a claim on the company’s assets and earnings. The more stock you have, the greater your claim as an owner. What are Stocks?

Types of Stock Common Stock – most common form of stock. One vote per share Dividends (profits) are not guaranteed Major risk to lose everything/ gain nothing Preferred Stock Fixed dividend May not include voting Functions similarly to bonds Types of Stock

You want to start buying stocks, where do you start? Bought and sold in markets called stock exchanges. Primary Markets – where stocks are created Secondary Markets – investors trade previously issued stocks The Stock Market Companies are not involved in the buying and selling of their stock. You want to start buying stocks, where do you start?

The Exchanges Stocks are Bought and Sold- Most Common New York Stock Exchange (NYSE) American Stock Exchange (AMEX) NASDAQ The Exchanges

A collection of stocks—representative of the stock market Dow Jones – 30 most significant stocks in the stock market S&P 500 – 500 largest companies on the US stock market NASDAQ Composite – all stocks on the NASDAQ The Indices (index)

Two primary sources of information about stocks: Stock Tables Usually published after the close of the markets. Stock Quotes (Tickers) Provide stock quotes in “real-time” while the markets are open. https://www.youtube.com/watch?v=mfJx4eFJgQ8 https://www.youtube.com/watch?v=bG4KRk3oZ0k

Research! Stocks Groups of two. Research ASSIGNED stock. Advanced Micro Devices Apple Ford General Electric Facebook GoPro Microsoft Fitbit Snap Bank of America Tesla Twitter Nvidia Alibaba Amazon Netflix Micron Technology Square Disney Chesapeake Energy Research! Groups of two. Research ASSIGNED stock. Prepare a TWO MINUTE informational presentation- focus on investing, why or why not? Your presentation can include one slide with information on it.

What Causes Stock Prices to Change? Supply and Demand Earnings and Expectations Sentiments and Attitudes Economic Indicators Follow the Leader (volume) Anything What Causes Stock Prices to Change?

Where do I Start? Learn the Basics Set Up a brokerage account Full-service vs. discount? The Internet provides a variety of discount brokerage firms (do it yourself) Fees, commission, minimum balance Keep it simple as you learn Learn about other investment vehicles Where do I Start?