+ Alibaba IPO Alibaba had one of the biggest IPOs in history, raising almost $25 billion in funds they can use! It’s current Market Capitalization (Market Cap) is $ billion. This is what it would cost to buy out all shareholders. Market Cap = # shares outstanding x current price

+ Market Cap Market Cap = # shares outstanding x current price Why is Market Cap important? It can give us an idea of the scale of the company’s operations Bigger companies have more stable stock, typically Smaller companies are in the formative stage, and present us with more risk – they are not “proven” yet

+ Calculate The Market Cap of Microsoft is billion and its price is $47.51 How many outstanding shares are there? Market Cap = # shares outstanding x current price 7.99 billion

+ Big, Big Companies Since Microsoft is so big, we call it a Large Cap (high dollar value capitalization) There are mid-caps, small caps, micro caps, and nano caps Large - $10 billion or more Mid - $2 billion to $10 billion Small - $300 million to $2 billion Micro - $50 million - $300 million capitalization Nano – under $50 million capitalization

+ Question What would make you invest in a micro cap company vs. a large cap? What would you recommend to an investor who didn’t have a lot of money, and wanted a safer investment? What do you think the Market Cap is for your DOW stock?

+ Compare Asset Classes Which asset class performs well during an expanding economy? Which asset class performs best during a recession? When do Large Caps stocks perform the worst? What is the difference between Large Cap Growth and Large Cap Core?

+ Value vs. Growth Investing this way is called “Style Investing” Stocks with high dividends (blue chips) are “Value” or “Core” stocks You keep them in your portfolio as a base Growth stocks have no dividend but their price rises faster These are riskier, but your Core balances out the risk

+ Question When should you buy a small cap stock? Which stock type is the riskiest, according to the Asset Class Return chart? If your parents were saving money since you were born for your college tuition, which style would you recommend? Write this down and explain why