1. Presents JA Stock Market Challenge

2. Privately Owned/Held Companies
Usually owned by fewer people – often just one.
Expensive to buy or sell – typically involving a lawyer.
Hard to buy – detailed negotiations are necessary.
Hard to sell – you must find a buyer.
Examples:
Local restaurants
Professional services like doctor’s offices and law firms
Dell, PetSmart, Toys “R” Us
Note: Franchises might be a source of confusion. Your local McDonald’s is privately held by a franchisee, while McDonald’s Corporation is a publicly traded company.

3. Publicly Owned/Held Companies
Typically owned by many people (often millions!)
Open to anyone buying a “share” of the company.
Minimal legal work required - buy or sell in minutes.
Buyer and Seller will probably never meet.
Usually bigger companies.
Examples:
Walmart, McDonald’s, Coca Cola
Discussion: Examples of publicly owned – typically the larger companies.

4. Stock Ownership A “share” of stock is ownership of a company.
Most companies on the stock market have millions of shares.
Photo: The Google stock certificate

5. Initial Public Offering (IPO)
An IPO is the very first sale of a stock by a company that had been privately held.
For the company, it means it is getting a large influx of cash.
For investors, it is a new opportunity to invest.
Things to look for:
Profitability
Long-term Growth Potential
How is the money to be used?
Company management
What is the company going to be using the money for?  Typically companies use the influx of money (in some combination) to reward employees and executives, pay off loans (retire debt), invest in operations, acquire other companies.  A company that is using more investor's money to retire debt and pay employees and executives is paying for past performance, compared to a company that is using the money to fund future growth (and hopefully, revenue!)

6. What is the Stock Market?
A Stock Market is also called an “Exchange”.
The Stock Market is where shares of companies are bought and sold (exchanged).
There are many stock markets worldwide.
The two largest and most famous:
New York Stock Exchange (NYSE) is largest and most famous, located on Wall Street in New York City
NASDAQ (pronounced “Nazz-Dack”) has many high-tech companies like Apple and Google

7. Stock Symbols Traders use symbols to refer to companies.
The symbol is usually an abbreviation.
AAPL Apple
MCD McDonald’s
GOOG Google
MSFT Microsoft
WMT Walmart

8. Why the Stock Market Matters
Companies can sell stock to raise money.
Retirement benefits are usually funded by stocks.
Insurance companies invest and can charge lower premiums if investments go well.
Discussions: What would companies use with raised money? (New Hiring, new equipment, Research & Development, Pay down debt, expand markets)

9. Making Money with Stocks
Until a stock is sold, the profit (or loss) is called “unrealized”. This means it is not an actual profit (loss) because the stock value could still change.
Only when a stock is sold, is the profit (or loss) “realized”.
There are two ways to make money on stocks:
Capital Gains
Dividend

10. Making Money: Capital Gains
Capital Gain means selling a stock for more than you paid for it.
Summed up as “Buy Low, Sell High”

11. Making Money: Dividends
Profits distributed to stockholders.
Paid for each share you own if stock is owned before and through the Ex-Dividend Date.
Example: If you own 1,000 shares and there’s a dividend of $2 per share, you’ll receive $2,000. And you still own the stock.

12. Making Money: Retained Earnings
Retained Earnings: Money a company is retaining for it’s use.
Reinvesting money in the business for things such as buying new equipment, paying off loans, saving it for later uses, etc.

13. Stockbrokers
Buyers and sellers don’t go to the Stock Exchange directly – they use a broker.
A broker can be a person who you meet or call, or a website like eTrade.
You pay a commission or fee for every trade (buying OR selling).
Fees are usually a flat amount per transaction.
Commissions are usually a percentage of the trade amount, usually between 0.5% and 2%.

14. Stock Transaction Case Study

15. Stock Transactions – Seller
Drew and Emily live in Pennsylvania and bought 500 shares of T-Nine Technologies stock a few years ago. They’re happy with the investment, but want to sell so they can put a down payment on a house for their new family.

16. Stock Transactions – Buyer
Meghan lives in California and just got a big bonus at work. She’s used some of her bonus to pay bills and still has money left over, and decided to invest. After researching online, she’s decided T-Nine Technologies seems like a good investment.

17. Stock Broker Involvement
Drew and Emily’s broker charges a 1.5% commission. This means his $10,000 sale will cost them $150 in commissions ($9,850).
Original investment: $3,500
Gain on investment: $6,350
Meghan’s broker only charges 1%, which means her $10,000 purchase will cost $100 ($10,100) Soon the stock is selling for $25 per share. She could sell now and make almost $2,500 profit!

18. Price Impacts

19. Supply & Demand
When a lot of people want to buy something (demand), the price goes up.
When fewer people want to buy something, the price goes down.
When there are more buyers, the price rises. When there are more sellers, the price falls.

20. Bears & Bulls Stock prices are always changing!
A BULL market is when the overall stock market prices are rising (or expected to rise).
A BEAR market is when the overall stock market prices are falling (or expected to fall).
Legend has it these were chosen based on how the two animals attack: A bull thrusts its horns upward A bear swipes its paws downward

21. Market Environment
Things that are viewed as good for business and the economy can push stock prices up:
Consumer confidence
Low interest rates
Political stability
Strong sales of products
Introduction of new products or services
Things that make a company more profitable

22. Market Environment
Things that are viewed as bad for business and the economy can push stock prices down:
Inflation
Unexpected bad news
Unpredictable politics
Weak sales
Product Recall
Lawsuits
Things that cause a company to lose money.

23. Market Prediction Exercise Stand = Rise Sit = Decline
Tell students, you are going to read a scenario. If they think the stock price will rise, they should stand. If they think the price will decline have them sit.
Question 1: A new Apple iPhone is introduced to the market for the first time. What happens to Apple’s stock? (RISE)
Question 2: Gas prices rise. What happens to the stock for Tesla (the electric car maker)? (RISE)
Question 3: Florida has unusually cold weather, negatively impacting the crop of oranges, making oranges more rare and more expensive. What happens to Tropicana stock? (DECLINE)
Question 4: A serious hurricane hits and many buildings are damaged. What happens to Home Depot stock? (RISE)
Question 5: An electronics company improves its assembly line to reduce the cost of production. What happens to its stock? (RISE) Question 6: An oil spill happens off the coast, how will it impact the stock of the oil company? (DECLINE)

24. The Simulation

25. Big Board Stock Symbol Change since yesterday (dollars and percentage)
All-time
Low
Company Name
Current Price
The first column contains the stock symbol, followed by the company name.
To the right is the price, the price change in both dollars and percentage in the past day Then the price change in dollars and percentage the last 5 days.
The all-time low is next. If a stock is currently at its all-time low, it will appear in red.
The all-time high is the final column. If the stock is at its all-time high, it appears in green, like Ampere, Hollingsworth and Interstate Gas and Delivery
The news is shown here at the bottom of the screen, but at our event, it will appear at the top.
It will also show top moving stocks from the previous day, as well as the volume of shares bought and sold.
Change in the last 5 days
(dollars and percentage)
All-time
High
News (now appears above)

26. Standings Screen Ranking Last Turn Cash On Hand Net Worth
Return on Investment
Ranking
Team Number and Name
Change in Ranking

27. Charts Screen (click on Stock Symbol)
Stock Price
For Day