DID YOU KNOW …….?

If you had invested $10,000 in Dunkin Donuts in 1982, you would have made $47,000 over the next 4 years If you had invested $10,000 in Dunkin Donuts in 1982, you would have made $47,000 over the next 4 years A $10,000 investment in the Gap (in ’76 it was $18 a share) would have resulted in a $250,000 gain. A $10,000 investment in the Gap (in ’76 it was $18 a share) would have resulted in a $250,000 gain. If you had invested the price of a Subaru car into Subaru stock in 1977 and sold it it 1986 you would have a made a million dollars. If you had invested the price of a Subaru car into Subaru stock in 1977 and sold it it 1986 you would have a made a million dollars. That’s right. A million dollars. That’s right. A million dollars. Coleco, maker of cabbage patch dolls, stock went from $65 a share in 1983 to…. Coleco, maker of cabbage patch dolls, stock went from $65 a share in 1983 to…. $1.75 just before filing before bankruptcy in 1988 $1.75 just before filing before bankruptcy in 1988 There’s no such thing as a sure thing There’s no such thing as a sure thing $1,000 invested in Wal-Mart stock in Jan of 1972 would now be worth….. $1,000 invested in Wal-Mart stock in Jan of 1972 would now be worth….. $1,165,000!!!!!!!!!!!!!!!!!!! $1,165,000!!!!!!!!!!!!!!!!!!! $1,000 invested in Microsoft in 1986 would now be worth about … $1,000 invested in Microsoft in 1986 would now be worth about …  $289,000 ($.10 in ’86 $29.12 in ’06)  Instead of spending $30 a month on lotto tickets put that same $30 a month in a good mutual fund. At retirement you will have well over $1,000,000

Margin –is buying stock on credit. Usually an investor will borrow from a broker. Margin –is buying stock on credit. Usually an investor will borrow from a broker. Diversification: Spreads the risk Diversification: Spreads the risk Stock Exchanges: where stock is bought and sold (market for buying and selling stock) Stock Exchanges: where stock is bought and sold (market for buying and selling stock)

The Dow Jones Companies Alcoa - AA Alcoa - AA American Express - AXP American Express - AXP AT&T - T AT&T - T Boeing - BA Boeing - BA Caterpillar - CAT Caterpillar - CAT Coca-Cola - KO Coca-Cola - KO Citigroup - C Citigroup - C Disney - DIS Disney - DIS DuPont - DD DuPont - DD Eastman Kodak - EK Eastman Kodak - EK Exxon Mobil - XOM Exxon Mobil - XOM General Electric - GE General Electric - GE General Motors - GM General Motors - GM Hewlett-Packard - HWP Hewlett-Packard - HWP Home Depot - HD Home Depot - HD Honeywell - HON IBM - IBM Intel - INTC International Paper - IP Johnson & Johnson - JNJ McDonald's - MCD Merck - MRK Microsoft - MSFT 3M - MMM JP Morgan - JPM Philip Morris - MO Proctor & Gamble - PG SBC Communications - SBC United Tech - UTX Wal-Mart - WMT Company - Symbol/Quote

NYSE New York Stock Exchange: countries largest and most powerful exchange New York Stock Exchange: countries largest and most powerful exchange as informal outdoor exchange in new York as informal outdoor exchange in new York Restricted number of Seats on Floor-allows them to trade Restricted number of Seats on Floor-allows them to trade Only trades stock of the largest and most established companies Only trades stock of the largest and most established companies Blue chip companies: Largest and best known companies…stock in high demand Blue chip companies: Largest and best known companies…stock in high demand

NASDAQ National Association of Securities Dealers Automated Quotations National Association of Securities Dealers Automated Quotations OTC: Over-the-Counter (electronically) OTC: Over-the-Counter (electronically) 2 nd largest securities market in the US (3 rd in the world) 2 nd largest securities market in the US (3 rd in the world) Links markets in US, Asia, and Europe Links markets in US, Asia, and Europe No trading floor…broadcast to computer terminals around world No trading floor…broadcast to computer terminals around world

Dow Jones Dow Jones Industrial Average companies that represent the major sectors of the American economy Dow Jones Industrial Average companies that represent the major sectors of the American economy Shows how certain stocks have traded on every business day Shows how certain stocks have traded on every business day The Dow “number” is an “average” of the closing prices of the 30 companies. If the Dow is up 30 points, then the average closing price of the 30 companies is up $30. Because of all the stock splits involved, the number is not divided by 30 but by some other divisor. The Dow “number” is an “average” of the closing prices of the 30 companies. If the Dow is up 30 points, then the average closing price of the 30 companies is up $30. Because of all the stock splits involved, the number is not divided by 30 but by some other divisor. GE is the only company on today’s Dow that was on the original Dow in the late 1800’s. GE is the only company on today’s Dow that was on the original Dow in the late 1800’s.

S & P 500 Standards and Poor’s 500: Broader picture of stock performance Standards and Poor’s 500: Broader picture of stock performance Track price changes of 500 different stocks as a measure of overall stock market performance Track price changes of 500 different stocks as a measure of overall stock market performance Reports stocks mainly on NYSE and some on NASDAQ Reports stocks mainly on NYSE and some on NASDAQ

YESTERDAY’S STOCK REPORT HELIUM WAS UP. PAPER WAS STATIONARY. PENCILS LOST A FEW POINTS LIGHT SWITCHES WERE OFF DIAPERS REMAINED UNCHANGED THE MARKET FOR RAISINS DRIED UP BALLOON PRICES WERE INFLATED SCOTT TISSUES TOUCHED A NEW BOTTOM.

Stock Market Terms 1. Stock Shares of ownership in a company Shares of ownership in a company By selling stock companies can raise money to start, run, and expand business (equities: claims of ownership in the corporation) By selling stock companies can raise money to start, run, and expand business (equities: claims of ownership in the corporation) 2. Dividend Company profit paid to stockholder (4 times a year/quarterly) Company profit paid to stockholder (4 times a year/quarterly) What animal describes a good market? 3. Bull Market Overall stock prices are Overall stock prices are rising rising

4. Bear Market Overall decline in stock prices Overall decline in stock prices 5. Mutual Fund  Fund that pools the savings of many individuals and invests this money in a variety of stocks and bonds 6. Net Change: number is how much the stock price changed from the previous day not how much the stock moved up or down during the day 7. Capital Gain: Difference in the higher selling price and the lower selling price 8. Capital loss: Investor who sells stock at a price lower than purchase price 9. Stockbroker: a person who links buyers and sellers of stocks

10. Common Stock : A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common stockholders are on the bottom of the priority ladder for ownership structure. In the event of liquidation, common shareholders have rights to a company's assets only after bondholders, preferred shareholders and other debt holders have been paid in full. 10. Common Stock : A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common stockholders are on the bottom of the priority ladder for ownership structure. In the event of liquidation, common shareholders have rights to a company's assets only after bondholders, preferred shareholders and other debt holders have been paid in full. 11. Preferred stock: Preferred stock is a mix between regular common stock and a bond -Each share of preferred stock is normally paid a guaranteed, relatively high dividend and has first dibs over common stock at the company's assets in the event of bankruptcy 11. Preferred stock: Preferred stock is a mix between regular common stock and a bond -Each share of preferred stock is normally paid a guaranteed, relatively high dividend and has first dibs over common stock at the company's assets in the event of bankruptcy

Stocks vs. Bonds owning stocks : ownership in a company owning stocks : ownership in a company Owners in a company are entitled to a company’s profits (if there are any), called dividends Owners in a company are entitled to a company’s profits (if there are any), called dividends Another way to own money with stock is to buy low and sell high (capital gain) Another way to own money with stock is to buy low and sell high (capital gain) owning a bond: lending money to a company owning a bond: lending money to a company Bond holders earn interest because they have loaned money to a company Bond holders earn interest because they have loaned money to a company They will receive an interest payment until the bond matures and then receive the amount loaned (principal) They will receive an interest payment until the bond matures and then receive the amount loaned (principal) debt relationship in bond purchases versus ownership with stock purchases debt relationship in bond purchases versus ownership with stock purchases

Mutual Funds “Basket of Stocks” “Basket of Stocks” when they buy a mutual fund you are buying the basket when they buy a mutual fund you are buying the basket Spreads the risk: diversification Spreads the risk: diversification