Stock Market Analysis and Personal Finance Mr. Bernstein Buying and Selling Stocks pp 291-299 February 10, 2015.

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Stock Market Analysis and Personal Finance Mr. Bernstein Buying and Selling Stocks pp February 10, 2015

Stock Market Analysis & Personal Finance Mr. Bernstein Buying or Selling Stocks: AMZN, Jan 29-Feb 3 2

Stock Market Analysis & Personal Finance Mr. Bernstein Stocks Pricing Prices of stocks go up and down constantly Check the chart of one of the stocks you selected over 1 day, 1 week and 1 month Movements theoretically based on the perception of future earnings and dividends an investor may receive Movements may be caused by temporary supply/demand imbalances (or perception of…) Decisions for the majority of transactions are made by a computer algorithm 3

Stock Market Analysis & Personal Finance Mr. Bernstein Brokerage accounts: Public securities primarily trade on exchanges Access to the exchange is restricted to members only How do exchanges compete and earn profits? What is the advantage of executing trades on an exchange? Broker/dealers are regulated businesses which offer access to trading, securities safekeeping, accounting, investment advice or research, and other services Brokers typically charge a commission for executing trades 4

Stock Market Analysis & Personal Finance Mr. Bernstein Central Exchange: The Buttonwood Tree How is a central exchange beneficial? 5

Stock Market Analysis & Personal Finance Mr. Bernstein Multiple Exchanges: Smart Order Routing (“aggregators”) Can brokers earn revenue by favoring one exchange in their order routing? 6

Stock Market Analysis & Personal Finance Mr. Bernstein Brokerage accounts: “Long” positions = ownership “Short” positions = sell stock you do not own, then borrow shares to deliver to the buyer “Margin”: Investors can borrow funds to buy stocks, or borrow shares to sell short How do brokers earn money by offering Margin services? 7

Stock Market Analysis & Personal Finance Mr. Bernstein Gathering Information Many brokers offer research to aid investors and attract customers Websites post blogs from popular contributors to attract viewers and increase advertising revenues Websites offer news stories and limited historical data to attract viewers and increase advertising revenues 8