Stock Market Analysis and Personal Finance Mr. Bernstein Stocks and Mutual Funds pp and April 1-2, 2013

Stock Market Analysis & Personal Finance Mr. Bernstein Stocks Companies can issue stocks to raise funds for startups, expansion projects or other uses Rather than borrowing funds, companies can sell slices of ownership of the company “Shares” entitle owners to a slice of future profits and, generally, some slice of the decision-making 2

Stock Market Analysis & Personal Finance Mr. Bernstein Stocks Private Equity slices are sold in customized transactions Public Equity slices are sold in regulated stock markets Public Corporations must meet various government regulations on shareholder rights and dissemination of information about company activity 3

Stock Market Analysis & Personal Finance Mr. Bernstein Dividends Periodic payments of cash (typically) to shareholders Determined by Board of Directors, can vary but typically is paid quarterly, stable and growing Subject to “double taxation”: Corporation pays tax on profits, then shareholder pays tax on dividends received 4

Stock Market Analysis & Personal Finance Mr. Bernstein Capital Gains/Losses Prices of stocks go up and down constantly Movements theoretically based on the perception of future earnings and dividends an investor may receive EPS: Earnings Per Share P/E ratio: Price / Earnings Movements may be based on perception others’ perceptions Movements may be caused by temporary supply/demand imbalances Movement may be caused by perception of supply/demand imbalances 5

Stock Market Analysis & Personal Finance Mr. Bernstein ETFs Exchange Traded Funds Trades on an exchange like a stock Not an operating business, but a trust company holding shares of stocks, bonds or commodities ishares.com, sectorspdr.com 6

Stock Market Analysis & Personal Finance Mr. Bernstein Mutual Funds Pool of assets managed by an investment advisor Open end funds can be bought or sold at the close of business each day based on NAV (Net Asset Value) Closed end funds can be bought or sold during the trading day like a stock or ETF and can trade at premiums or discounts to NAV Common investment vehicle for individuals The investment advisor charges a fee or fees that are deducted from the pool of assets Many asset and investment objectives available 7

Stock Market Analysis & Personal Finance Mr. Bernstein Preferred Stocks Includes limited voting rights Pays a set dividend rate, typically higher than common stock Company commits to paying Preferred dividends before common dividends Can be convertible into common stock 8

Stock Market Analysis & Personal Finance Mr. Bernstein IPOs Initial Public Offerings The first sale of stock to the public Changes the nature of the company Due to the lack of a public track record, often must be priced at a discount to comparable company valuations May be a new company or may be a private company “going public” 9

Stock Market Analysis & Personal Finance Mr. Bernstein Types of Stocks Large Cap (Microsoft - MSFT) Small Cap (Monmouth Real Estate Investment Corp – MNR) Value or Cyclicals – companies whose business is levered to the economy (Caterpillar, US Steel) Growth – companies whose business growth is less dependent on overall economic growth (Johnson & Johnson, Kimberly Clark) “Blue Chip” – large, predictable companies (IBM, General Electric) Income Stocks – pay high dividends Penny Stocks – small, thinly capitalized companies 10

Stock Market Analysis & Personal Finance Mr. Bernstein Finding tickers Common market data websites: nasdaq.com cnbc.com yahoo.com/finance cboe.com bloomberg.com smartmoney.com cnnmoney.com Select a few stocks or ETFs you would like to follow and save them in an.xls file. 11

Stock Market Analysis & Personal Finance Mr. Bernstein Gathering Information Many brokers offer research to aid investors Websites post blogs from popular contributors Websites offer news stories and limited historical data 12