1. INTRODUCTION TO INVESTING
by Matt Ingram
Invest Ed®
All Rights Reserved
Oklahoma Securities Commission
Webinar

2. Capital Flows from Investors to Corporations
Corporations need capital; investors have capital.
So, they borrow from banks or the public.
Or, they can sell part of their business in return for cash.
The ownership sold is known as “equity.” It could be private or publicly traded.
If the shares trade on an exchange, this is called “going public.” (IPO)

3. Types of Investments Also known as ownership in a firm
Get “shares” of stock
Limited downside, unlimited upside
Unlimited life, can grow forever, may even split
Residual claim

4. Types of Investments, part 2
Debt
Many varieties—could be time deposits, bonds, money market accounts
Periodic interest payments and principal
Limited upside and downside
Limited life

5. Types of Investments, part 3
Mutual Funds
Investment pool
Can own any type of asset
Extremely popular with retail investors
Real Assets
Real estate
Gold, other commodities
Collectibles

6. Why Do We Own Stocks?
Over time, equities have outperformed all other assets classes.
Capital Gains
Dividends
Participation with economic growth and innovation
Passive ownership of business

7. How Do We Own Stocks? Retirement account Brokerage account 401k, 403b
IRAs
You really don’t know which ones you own.
Brokerage account
Full service
Discount
You can pick your stocks or get advice from a professional.

8. What is the Stock Market?
When you hear “the market,” it’s usually the S&P 500 Index.
Or it could be the Dow Jones Industrial Average. (“the Dow”)
Each market around the world has an index everyone follows.
Most stocks are part of an index; some are not.

9. What Drives Equity Prices?
Emotions in the short term (greed and fear)
Booms and Busts
Profits in the long term (net income and free cash flows)

10. What is a Stock Worth?
It’s really worth what the market tells you at a point in time.
But that price changes all the time.
Any asset should be worth the PV (present value) of all future expected cash flows.
What are the CFs (cash flows) shareholders are entitled to receive? Dividends? Net Income?

11. Fundamental Analysis
examination of a firm’s accounting statements and other financial and economic information, marketing prospects, etc. to determine if the current market price is too high or too low
The basic idea is to identify “undervalued” stocks to buy and “overvalued” stocks to sell.
In effect, the analyst is pitting his/her skill at evaluating the company’s status with the “wisdom” of the market. She/he may or may not be better.

12. Technical Analysis
techniques for predicting market direction based on (1) historical price and volume behavior, and (2) investor sentiment
Technical analysts essentially search for bullish (positive) and bearish (negative) signals about stock prices or market direction.

13. Some Stock Terminology
Market capitalization
Large/Mid/Small cap
Ticker
Long/short
Shares outstanding