1. Marketing / DECA
Stocks In Review

2. What are they? Stocks ownership in a corporation 1 share = 1 vote
Works like a democracy
1 share = 1 vote
50% + 1 share would constitute enough voting power for a hostile takeover

3. Bill Gates Transaction

4. Why do you invest in stocks?
Better Return than most savings, CD’s, or Bonds
Stock market itself offers a 7-9% annual return since its inception
Despite all the events that have happened it will typically climb

5. Basic Risk v. Return High Risk = High Return Low Risk = Low Return
Potentially stocks
Low Risk = Low Return
Bank Accounts
Nothing is guaranteed in the market

7. Historical Movements Bull Markets Bear Markets 1920-1929 Early 1990’s
Roaring 20’s
Industrial Revolution
Early 1990’s
Tech Boom
Bear Markets
October
(Great Depression) Stock Market Crash
September
(Y2k, 9/11)
2008 Financial / Housing Crisis

8. Types of Stocks
Blue Chip Stocks – Small Growth / Stable / Large Cap / traditionally safe
Penny Stocks – Potential for Growth / High Risk / Small Cap
Growth Stock- growing companies /expanding
Cyclical Stock – run alongside the economy
Restaurants, Hotels, car companies, clothing stores

9. Market Capitalization
Types of Caps
Mega = over 250 Billion
Large = over 10 Billion
Mid = 2-10 Billion
Small = less 1 billion
Micro = less than 250 million ( risky)
Formula= Shares Outstanding x Current Price
Microsoft Worth

10. Diversification
Invest across Industry / Sectors multiple different areas: Stocks, Bonds, Cash (ex. Mutual Funds)
Harry Markowitz – created the idea
(Nobel Prize Economics)

11. Security Exchanges - Stock Markets
NYSE – over 3,000 companies
Worth: Approx trillion
NASDAQ – mostly Tech Stocks or internet based companies
AMEX- smaller stocks (penny stocks)

12. Other Physical Markets
Regional Markets
S.F / Chicago / Boston
Intl Markets:
Tokyo (2nd largest in the world), London, Paris, Toronto, Sydney

13. Benchmark Index Comparing Stocks to the Market S&P 500
Standard and Poor's (S&P) is a well-known provider of indices that measures the performance of the stock market.
The S&P 500 Index comprises the largest 500 companies in the U.S.
The popular S&P 500 Index, also known as "Spiders" by its ticker symbol SPY, has more than $1 trillion trades on the AMEX.

14. Other Benchmarks The best-known indicators:
Dow Jones ( more than 100 years old)
The best-known indicators:
The Dow Jones Industrial Average
Sub categories are also available
Dow Jones Transportation Average
Dow Jones Utility Average.

15. What makes a good Stock Basic Factors: Low price compared to 52 week
Multiple Shares held by institutions
Low amount held by insiders
Dividend Paying Companies
Companies who share their profit with investors by paying them for simply owning the stock
Dividends are not required
Low Amount Debt
Good Free Cash Flow
What are the insiders doing?
Important: beware from stocks with “weird” or no financial information new startups or private gone public

16. What drives Prices: News Impact on Stocks
New Products/ Technology
Economic
ex. Federal Reserve raising Interest rates
Natural Disasters
Favorable/ Unfavorable Quarterly Filing with SEC
Law Suits

17. How does the market work?
Auction Format:
Buyers (bid) & Sellers (ask)
Sample Quote
Investing strategies
Buy Low - Sell High
Buy/Hold – Best Investing Strategy for the long term
Stocks are traded with Ticker symbols
Ex. SBUX- Starbucks MSFT- Microsoft

18. Buying & Selling Or Trades
Market Order
Buy at the current market price
Limit order
Sets to buy or sell at a particular price
Strategy so you don’t have to watch the market

19. What is short Selling? The opposite of the basic trading
A broker will lend you the stock
You will sell it immediately
At a specified date you will return the stock
You hope to buy it back at a lower price and collect the difference
The broker will earn a fee for loaning it to you
Sometimes frowned upon by investors

20. Why invest more if you lose? Is it a Good idea?
Dollar Cost Averaging
Two Transactions
January
Buys 10 $20
February
Buys 10 $10
June
Current Price $15
Actual cost: $15 = Break Even

21. Stock Splits Amount of Shares – 2x Price: Cuts in half .5 or 1/2
Example: (2:1)
500 $100 a share
= 1000 shares $50 share

22. Why do Stocks Split?
Price too high for investors – attract more investors
Allows for growth
New product developments
More Research and development
Most common splits
2:1 (common)
Any combination they want
Reverse Splits 1:5
Used to increase stock price
If the stock price gets too low it becomes delisted

23. IPO’s IPO’s- Initial Public Offering
Business Startups
Private Companies
Primarily used to generate more cash in the business
Expansion
Research and Development
Exit Strategy for Founders
Potentially High Risk
No financial history / track record

24. SEC: Security Exchange Commission
Government Agency who governs the market – Incorporated in 1934 by President Franklin Roosevelt
Businesses are Required to file:
Quarterly / Annual financial reports
Dividends
Insider transactions
Search Red Flags
Trading of corporate information
Insider Trading
Friends / Family/ Government officials

25. Miscellaneous Fun Facts
Wall Street got its name from the Wall they built to keep the Native Americans out
The Dow Jones Index came from the original Publishers of the Wall Street Journal
Charles Dow & Edward Jones