022811 econ mutual fund 50m

DRAW A LINE SEPARATING TODAY & YESTERDAY1) Write: Date: 02/28/11, Topic: Mutual Funds2) Next line, write “Opener #25” and then:

1) Write 1 high+1 low in last 24 hours2) Rate your understanding of yesterday: lost<1-5>too easy (3 is perfect)

3) Respond to the Opening Clip by writing at least 1 sentences about:Your opinions/thoughts OR/ANDQuestions sparked by the clip OR/ANDSummary of the clip OR/ANDAnnouncements: None

Agenda1) Stock Market Review2) Mutual Funds and ETFs

End Goal, you will be able to…1) What can I do other than stocks?

Reminder1) Print out Stock Portfolio by Thurs2) Extra Points: Bring Laptops Tomorrow

Participation (10 points a week)Negative Mark: Minus 2 Points Each0 Check: 6 Points1 Check: 7 Points2 Checks: 8 Points3 Checks: 9 Points4 Checks: 10 Points 5 Checks: 11 Points (+1 EC)6 Checks: 12 Points (+2 EC)7 Checks: 13 Points (+3 EC)8 Checks: 14 Points (+4 EC)

Review: Stock Data:Last Trade: Market price for a shareOpen Trade: Price it opened in morningDaily Range: Today’s high/low range52 Week Range: Last 12 mo. high/low range

a) Market Cap: Stock price X number of shares circulating. Sign of how big the comp is

b) Volume: Number of shares sold that dayc) Beta: How likely does it swing up/down, 1

is market average, over 1 is more volatile

d) EPS (Earnings Per Share): Net Income ÷ Shares Circulating (Higher is better, more earnings per share: how much earnings per each share of stock, not all earning always given back to shareholders, sometimes re-invested)

e) PE (Price Earnings Ratio): Stock Price ÷ EPS (Lower better, more bang for your buck: how much you are paying for $1 of comp’s current annual earnings, ROI point, if biz grow fast, ROI can be faster).

Journ #25a, Title “Stock Practice”Use a calculator, and work with a partner.

1) a) Mattel has 393 million shares circulating, the price of the stock is $13, what is its market cap?

b) Mattel made $560 million in income and has 393 million shares, what is its EPS?

c) Using the stock price of $13, and EPS above, what is the PE ratio?

Journ #25a, Title “Stock Practice”Use a calculator, and Journ with a partner.2) Read the Doc A (stop at “Better measure”),

first explain what is PEG and based on what you read, is GOOG is a good buy?

Yahoo:Stock Price: 16.37Div: 0EPS: 0.90P/E: 18.193) Compared to YHOO, is GOOG a good buy?

Notes #25a, Title: “Mutual Funds” 1) Mutual Funds: A pool of money invested by a

professional in a group of stocks (picked through a specific strategy: lo/hi risk, etc).

a) Net Asset Value (NAV): Price based on the (stock prices) of the pooled investment divided by the number fund shares. Managers of the fund take a fee/commission.

Like stocks, you money when you sell the mutual fund or are paid dividends.

Journ #25b, Title “Create a Mutual Fund”

1) Your team has been hired to manage a new mutual fund to invest in companies that serve the youth market. Come up with a mutual fund name: _______ Youth Market Mutual Fund

2) Come up with a list of promising companies that serve the youth market.

Be prepared to present.

Notes #25b, Title: “Mutual Funds” 2) Index: List of stocks that help gauge the stock

performance of the stock market (thermometer) a) Dow (7,992): Index of 30 largest, most traded

stocks public companies.b) Nasdaq (1,547): Index of 4000 stocks traded on

NASDAQ, typically newer public companies, many tech.

c) S&P 500 (840): Index of 500 largest, most traded stocks public companies.

3M Co. (MMM)Alcoa, Inc. (AA)American Express Companies (AXP)AT&T Inc. (T)Bank of America Corp. (BAC)Boeing Co. (BA)Caterpillar Inc. (CAT)Chevron Corp. (CVX)Cisco Systems Inc. (CSCO)Citigroup Inc. (C) - dropped 6/1/09Coca-Cola Company (KO)DuPont (DD)Exxon Mobil Corp. (XOM)General Electric Company (GE)General Motors Corporation (GM) - dropped 6/1/09

Hewlett-Packard Co. (HPQ)Home Depot, Inc. (HD)Intel Corporation (INTC)International Business Machines (IBM)Johnson & Johnson (JNJ)JPMorgan & Chase & Co. (JPM)Kraft Foods Inc. (KFT)McDonald's Corporation (MCD)Merck & Co., Inc. (MRK)Microsoft Corporation (MSFT)Pfizer Inc. (PFE)Procter & Gamble Company (PG)Travelers Companies Inc. (TRV)United Technologies Corporation (UTX)Verizon Communications (VZ)Wal-Mart Stores, Inc. (WMT)Walt Disney Co. (DIS)

Notes #25b, Title: “Mutual Funds” 3) Index Fund: A fund where the manager buys

the stocks on a preset list like the S&P 500 (cheaper since less research/skill involved)

4) Exchange Traded Fund (ETF): Like index fund, cheaper cause it’s automated (acts like stocks, no active management: which means dividends not re-invested)

Many economist argue that it’s safer to buy a fund that spreads nearly the whole market like an index fund or ETF b/c it’s difficult to beat the market trend, this is called “efficient market theory.”

Warren Buffet’s advice to investors.

Est. Wealth of $52 Billion Dollars

Warren Buffett reiterated his view that for most small investors who don't have time to research individual companies, cheap index funds are the best way to invest in the stock market. "The best way in my view is to just buy a low-cost index fund and keep buying it regularly over time, because you'll be buying into a wonderful industry, which in effect is all of American industry. If you buy it over time, you won't buy at the bottom, but you won't buy it all at the top either," the billionaire investor said. In contrast to mutual funds run by portfolio managers actively picking stocks, "If you have 2% a year of your funds being eaten up by fees you're going to have a hard time matching an index fund in my view," Buffett said. "People ought to sit back and relax and keep accumulating over time."

Journ #25c, Title “Getting Rich”Read the article than answer: 1) According to the article, make a list of rules for yourself on how can you get rich.2) Share with your partner, and have them sign here.

5 Reading/Film Qs Come From These Work Sections

Notes #25c, Title: “Mutual Funds” Review: CDs, Bonds, Stocks, Mutual Funds5) Other Investments: a) Metals (Gold)/Commodities (Oil): value based

on suppy/demandb) Pensions (guarantee benefits) or 401k

(benefits based on value of portfolio)c) Life Insurance: can close policy + cash out %d) Private Businesses (Angel): becoming partner

more next month e) Property (live/rent): more tomorrowf) Your education/job training

Lottery is not a form of retirement!

Homework: 1) No homework.

For 3 extra particapation points, bring a laptop tomorrow (Tuesday)

Workbook Check: If your name is called, drop off your workbook with Mr. Chiang (if requested, points lost if your workbook is not turned in)