 Equities

History  What were the first stocks?  Where were they traded?  Who traded them?

The First Stock Exchange  Where and when was the first stock exchange created?

Antwerp, Belgium (1531)

How it started…  Began as debt issuance  The concept of equity was not yet created  Market was made of debt  Some finance partnerships

East India Companies  As shipping boomed in the 1600s  Investors put money up  Received a share in the profits to lessen risk  LLC’s were formed

East India  East India companies fully established  Profit sharing?  First joint stock companies  Allowed companies to demand more  Size and royal charters meant huge profits

Coffee and stocks??  What do coffee and stocks have in common?  East India companies traded on paper  No stock exchange  How did people trade?

The South Seas Bubble  The riches did not last long …  The British East India Company & SSC (South Seas Company)  Other investors wanted a slice  No rules or regulations for issuances  Retaking sunshine from vegetables??  Bubble burst when SSC failed to pay dividends

The New York Stock Exchange  Philadelphia stock exchange  NYSE had geographically competitive advantage  In the heart of all business and trade coming in  Buttonwood Agreement

NASDAQ  Brainchild of National Association of Securities Dealers  Does not inhabit physical space  Increased efficiency  Reduced bid ask spread  Forced NYSE to evolve

Equities / Stocks  A type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets or earnings  Ownership  Two types:  Common stock  Preferred stock

Liquidation  What you need to know about liquidation…  What is liquidation

Dividends  Distribution of corporate earnings  Given to shareholders at regular intervals  Different forms of issuance

Dividend Yields

Share Buybacks  A program by which a company buys back its own shares from the marketplace  Reduces the number of outstanding shares  Management thinks they are undervalued  Two options

Share Buybacks

Stock Splits  A corporate action in which a company divides its existing shares into multiple shares  Always by a specific multiple  Dollar value is unchanged  Why?

Stock Price  Supply and demand  Constant revaluations  Value Stock Price  Market Cap

Largest Companies by Market Cap

Apple $632.6 Billion

Google $400 Billion

Microsoft $358.1 Billion

Berkshire Hathaway $320.8 Billion

Exxon Mobil $316.5 Billion

Bid-Ask Spread Buy or sell: Buy Of what: EvanCo How many: 1,000 shares What price: $100 Buy or sell: Sell Of what: EvanCo How many: 1,500 shares What price: $125

Making the trade  Five types of orders:  Market Order  Limit Order  Day Order  Fill or Kill  Stop Order

Market Order  Can be filled at the market or prevailing price  Usually the first order to get filled  Generally reliable  One pitfall

Notorious Example

Limit Order  Buy or sell a certain amount of stock at a given price or better  Buy limit order  Sell limit order

Thank you!

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