+Alibaba IPOAlibaba had one of the biggest IPOs in history, raising almost $25 billion in funds they can use!

It’s current Market Capitalization (Market Cap) is $178.32 billion. This is what it would cost to buy out all shareholders.

Market Cap = # shares outstanding x current price

+Market CapMarket Cap = # shares outstanding x current priceWhy is Market Cap important?It can give us an idea of the scale of the company’s operationsBigger companies have more stable stock, typicallySmaller companies are in the formative stage, and present us with more risk – they are not “proven” yet

+Calculate

The Market Cap of Microsoft is 379.98 billion and its price is $47.51

How many outstanding shares are there?

Market Cap = # shares outstanding x current price

7.99 billion

+Big, Big Companies

Since Microsoft is so big, we call it a Large Cap (high dollar value capitalization)

There are mid-caps, small caps, micro caps, and nano caps

Large - $10 billion or more Mid - $2 billion to $10 billion Small - $300 million to $2 billion Micro - $50 million - $300 million capitalization Nano – under $50 million capitalization

+Question

What would make you invest in a micro cap company vs. a large cap?

What would you recommend to an investor who didn’t have a lot of money, and wanted a safer investment?

What do you think the Market Cap is for your DOW stock?

+Compare Asset Classes

Which asset class performs well during an expanding economy?

Which asset class performs best during a recession?

When do Large Caps stocks perform the worst?

What is the difference between Large Cap Growth and Large Cap Core?

+Value vs. GrowthInvesting this way is called “Style

Investing”Stocks with high dividends (blue chips)

are “Value” or “Core” stocksYou keep them in your portfolio as a base

Growth stocks have no dividend but their price rises fasterThese are riskier, but your Core balances

out the risk

+Question

When should you buy a small cap stock?Which stock type is the riskiest, according

to the Asset Class Return chart?If your parents were saving money since

you were born for your college tuition, which style would you recommend?Write this down and explain why