1. Introduction to the Stock Market
The Basics of Stock Investing

2. Why Invest Money?
You must earn more than the rate of inflation to raise wealth
Stocks & Bonds are common investment options
Bonds: a loan to a Gov’t or business where you earn interest
Stocks: You become part owner in a company
Your
Money
U.S. Gov’t
5-Year Bond
$1,000
You are paid 3% interest
$30 per year

3. The longer the holding period----the more risk you should take!
Stocks = long term investment (5-years or longer)
Bonds = medium term investment ( 1-3 years)
Bank CD’s = short term investment (30 days to 2 years)
Average return per year

4. Why Companies Issue Stock
To raise money to expand/ run business
Investment Banks help companies issue stock
IPO = initial public offering
When a new company sells stock for the 1st time

5. Stock Market Introduction Worksheet

6. Sectors of Stock Market
Industry Type
Sectors of Stock Market
Technology
Transportation
Retail
Financials
Energy
Health Care
Defense
New Industries (looking to the future…)

7. 2 Goals of a Company 1) Maximize Profits (each year)
2) Grow Profits (over time)
Companies that grow
PROFITS
the fastest
have the best
stock performance

8. Key Stock Indices S&P 500 Index Largest 500 companies by $ value
WHY INDICES:
There are over 5,000 stocks!
Indices give the average
Performance of the overall
market
S&P 500 Index
Largest 500 companies by $ value
Dow Jones
30 very large American companies
Nasdaq
primarily technology stocks

9. Stocks in Dow Jones Index COMPANY NAME 3M Co. Alcoa Inc.
Altria Group Inc.
American Express Co.
American International Group Inc.
AT&T Inc.
Boeing Co.
Caterpillar Inc.
Citigroup Inc.
Coca-Cola Co.
E.I. DuPont de Nemours & Co.
Exxon Mobil Corp.
General Electric Co.
General Motors Corp.
Hewlett-Packard Co.
Home Depot Inc.
Honeywell International Inc.
Intel Corp.
International Business Machines Corp.
Johnson & Johnson
JPMorgan Chase & Co.
McDonald's Corp.
Merck & Co. Inc.
Microsoft Corp.
Pfizer Inc.
Procter & Gamble Co.
United Technologies Corp.
Verizon Communications Inc.
Wal-Mart Stores Inc.
Walt Disney Co.
Stocks in
Dow Jones Index

10. BULL or BEAR MARKET? . .

11. Recent Stock Market History
Stock market hit a high in March of 2000
3 years of negative returns followed [2000,2001,2002]
2003 SP %
2004 SP %
2005 SP %
2006 SP %
2007 SP % % % % %

12. Top 10 things to know about Stocks
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