Stock Market. Corporation Legal entity owned by stockholders who all face limited liability (responsibility) for the businesses' debt.

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Presentation transcript:

Stock Market

Corporation Legal entity owned by stockholders who all face limited liability (responsibility) for the businesses' debt

Stock Market Started over 200 years ago in Manhattan Started over 200 years ago in Manhattan

Stock – a share that represents a portion of ownership of a corporation 4 types of stocks Penny Penny Growth (has potential, but unstable) Growth (has potential, but unstable) Secondary – well established, stable Secondary – well established, stable Blue Chips (safest & highest earnings – Wal-Mart Exxon-Mobile) Blue Chips (safest & highest earnings – Wal-Mart Exxon-Mobile) Dividend – Cash payment (Quarterly)

Stock Broker – Person who buys or sells stocks. He gets a commission from every transaction Floor Trader – Completes the transaction on the floor of the stock exchange

Types of Markets New York Stock Exchange (NYSE) – Largest exchange in the US New York Stock Exchange (NYSE) – Largest exchange in the US NASDAQ-AMEX – specializes in tech & energy stocks NASDAQ-AMEX – specializes in tech & energy stocks

What you hear on the radio – how to measure stock market performance Dow Jones – The average of 30 large corporations Dow Jones – The average of 30 large corporations S&P 500 – Measures 500 different stocks to measure of stock market performance S&P 500 – Measures 500 different stocks to measure of stock market performance Bull Market – When the stock market rises steadily over a period of time Bull Market – When the stock market rises steadily over a period of time Bear Market – When the stock Bear Market – When the stock market falls over a period of time market falls over a period of time

SEC - Security Exchange Commission Keeps brokers/traders honest Keeps brokers/traders honest Requires public companies (corporations) to disclose truthful financial information Requires public companies (corporations) to disclose truthful financial information Protects against insider information Protects against insider information (Martha, Martha, Martha)

What makes stocks go up/down Interest rates Interest rates State of the economy State of the economy Time of the year Time of the year Publicity Publicity

What to ask before you buy/sell a stock 1. How much profit has the company made recently 2. Are their products in demand 3. Is there a lot of competition 4. Check the P/E ratio (Price/Earning) - relationship between price and annual earnings -the lower the better