MARKETS COMPANIES INDEXES OBJECTIVES FUNDAMENTALS.

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Presentation transcript:

MARKETS COMPANIES INDEXES OBJECTIVES FUNDAMENTALS

INVESTMENT MARKETS EXCHANGE Auction Market – ‘Open Outcry’ Physical Location – Floor Traders – 18 Trading Posts New York Stock Exchange – NYSE – ‘The Big Board’ American Stock Exchange – AMEX Tokyo Stock Exchange London Stock Exchange OVER-THE-COUNTER Computer communications network – Links securities dealers Negotiated market – Broker dealers and ‘market makers’ NASDAQ – National Association of Securities Dealers Automated Quotations Most all initial public offerings completed ‘over the counter’ Three levels of reporting and tracking trades Any securities trade not handled on an exchange The largest securities market

MUTUAL FUND INC (Investment Company) INVESTORINVESTOR Expenses Dividends Components of Return Stock - Microsoft - Enron - IBM - AT&T - Fly by Night Inc. - Chevron Management Fee Custodial Fee Cap Gains (losses) Interest Dividends Capital Gain Income Dividend Income Realized Unrealized Mutual Fund Shares -Commission -No Load $$$ Reinvested INDEX FUND INC (Investment Company)

Wilshire 5000 Total Market Index - TMWX Tracks the overall performance of the American stock markets 6,700 publicly-traded companies 30 significant stocks traded on the New York Stock Exchange and the Nasdaq Dow Jones Industrial Average - DJIA invented by Charles Dow back in Standard & Poor's 500 Index - S&P 500 An index of 500 stocks Russell 1000 Index Dow Jones Transportation Average - DJTA Dow Jones Utility Average - DJUA 15 utility stocks Tribune/Bloomberg Index 20 transportation stocks Russell 2000 Index Russell 3000 Value Index Utah’s 32 largest publicly held companies Tracks the performance of smaller segments of the stock markets MARKET INDEXES Performance benchmarks

MUTUAL FUND INC (Investment Company) INVESTORINVESTOR Expenses Dividends Components of Return Stock Management Fee Custodial Fee Cap Gains (losses) Interest Dividends Capital Gain Income Dividend Income Realized Unrealized Mutual Fund Shares -Commission -No Load $$$ Reinvested INDEX FUND INC (Investment Company) 72% of Index Funds Outperform their Mutual Fund Equivalent - Microsoft - Enron - IBM - AT&T - Fly by Night Inc. - Chevron

Investment Objectives Government Bond Funds Municipal Bond Funds Sector Funds (Health Care) Emerging Markets Funds International Funds Real Estate Funds Commodity Funds Large Cap Growth Funds Different types of investments whose performance reflects the investors’ goals based on their time horizon, risk tolerance and personal wishes

Large Cap Mid Cap = $10 B – $200 B Stocks of Companies that have a low P/E ratio relative to their peers Small Cap GrowthBlendValue = $2 B – $10 B = $300 M – $2 B Stocks whose revenues and /or earnings are or will be growing faster than their peers Capitalization Shares Outstanding (x) Market Price per share 314,870,600 x $ = $28,180,918,700 = $28B

Price/Earnings (PE) Ratio? Current Price per Share Earnings per Share = Price/Earnings Ratio Price Earnings RatioRisk Price Earnings RatioRisk

FIVE INVESTMENT FUNDAMENTALS DIVERSIFICATION DIVERSIFICATION ALLOCATION ALLOCATION HISTORICAL PRICING MODELS HISTORICAL PRICING MODELS MANAGING THE MANAGERS MANAGING THE MANAGERS INVEST MORE MONEY! INVEST MORE MONEY!

1 ExxonMobil76.1 $ 387, Johnson & Johnson , Procter & Gamble , AT&T , Chevron , Microsoft , IBM , General Electric , Wal Mart , Pfizer14.194, Cisco Systems16.193, JPMorgan Chase24.691, Apple97.886, Abbott Labs55.886, Hewlett Packard35.286, Google35985, Verizon Communications3085, Coca-Cola40.780, Intel14.178, PepsiCo49.576, Philip Morris International3672, Wells Fargo16.468, Oracle17.668, ConocoPhillips46.168, McDonalds57.363,841.13