Introduction to Stocks Basics of Investing I K. Robinson

What is a stock?  Common stock  Gives you a “share” of ownership of a publicly traded company  Stock ownership – Voting rights – Claim to assets (behind debt holders) and earnings

What is a stock?  Ticker symbols – Set of letters that represent a security traded on an exchange – Ex. MSFT, GS, AAPL, MA, BUD, LUV  Stock quotes – List of prices for a stock at a particular point during the trading day  Stock tickers – What do those green and red numbers mean?

More Stock Quotes

Stocks vs. Bonds  Stocks are equity – Generally considered riskier – Quite possible to lose a significant portion, if not all, of your money – Potential for high returns  Bonds are debt – Lower and usually fixed return – Higher claim than stockholders  What does this mean?

What Can Cause Stock Prices to Change? EASY!  Supply and Demand! But…what affects supply / demand of a stock?

What Can Cause Stock Prices to Change?  Earnings & growth expectations  Positive / negative news  Economy sentiment  Investor sentiments & attitudes

How Stocks Are Traded  Major exchanges – Lists stocks (and other securities), sets policies for how stocks are traded  New York Stock Exchange (NYSE)  American Stock Exchange (AMEX)  National Association of Securities Dealers Automated Quotation  Only “publicly traded companies” are listed

Markets Indices  S&P 500 – 500 stocks chosen by Standard & Poor to represent US stock market  NASDAQ Composite--With approximately 3,700 companies and corporations, it has more trading volume than any other stock exchange in the world, many of which are technology and electronics  Dow Jones Industrial Average – 30 most significant stocks traded

Stocks Markets & Animals  Bull Market – When everything in the market is going great and stocks are generally heading upwards  Bear Market – When everything is NOT GOOD and stocks are generally headed downward  NOTE: Nothing lasts forever! Good times and bad times will end at some point

Brokerages  Need a medium to trade through – this is where brokerages come in  Criteria – Full service vs. discount – Fees (commission) – Services / tools – Minimum balance

Opening an Account  Not a hard process- most of it just some paperwork and mail – Sign-up online and download forms – Mail checks, forms, and copy of ID – Accounts created within a couple of days  What you will need: a computer, starting capital, and investing know-how

Principle of trading stock  Buy your stocks when the prices are low.  Sell your stocks when the prices are high.