ELON MUSK DISNEY CO.Katsuaki Watanabe CHECKING THE STOCKS Shares represent individual ownership in the corporation. 1 share of per share. selling stock. * corporations raise investment capital by selling stock. 1. Historical earnings. 2. Estimates of the companys future earnings made by corporate officers. 3. Perceived strength of the companys product or services. 4. Perceived strength of the companys sector. (health care, retail, auto, oil) How is picking the right stock similar to picking the right spouse? 1. Dividends = quarterly profit paid to shareholders. ex. If a company pays.15 per share x 100 shares = Capital gains = profit from selling stock. ex buy in 1998 sell in 2006 capital gains of $ 6.30 per share. Yahoo IPO: $13.00 per share $ per share Find the quarterly dividend of Cisco Systems if they had $8.2 million dollars profit and have 55 million shares publicly traded. 1. Broker = Fee based/commission middle man * full service or online. - Employers offer discounted stock offering to its employees as part of compensation package. Round Lot = Multiples of 100. Ex. $21.00 = $2, Odd Lot = Smaller than 100. (commission is higher). If price of stock is too high to attract investors, company may split stock. ex. 1 share at $50.00= 2 at shares at $25.00 Total value does not change, just the number of shares. You have 100 shares of Disney stock at $ x $89.00 = $8, To attract new buyers 2 for 1 split- 200 $44.50 = $8, for 1 split- 300 $29.66 = $8, Note - The total value of the portfolio does not change, just the amount of shares. Widely used indexes: 1. Dow Jones Industrial Average (DJIA) 30 U.S. companiesStandard & Poors U.S. Stocks Bull Market When the market rises steadily over a period of time. (Buyers exceed sellers = Stock prices rise) Bear Market When the market falls for a period of time. (Investors sell to cut losses) Ways to diversify: 1. Industry- buy stocks in unrelated industries so that you are not exposed to a down turn in one particular industry 2. Allocation Example: $10, $2, = Microsoft/Technology $2, = Ford/Automobile $2, = Chevron/Oil $2, = Wal-Mart/Retail $2, = Disney/Entertainment 1.Five different industries. 2.Putting $2, in each stock is a form of diversification by allocation. Go to Name of stocksymbolprice# of shares total investment 1. ________________________ X_________ = _______________ 2. __________________ ______ X _________ = _______________ 3. ___________ _______ ______ X _________ = _______________ 4. ___________ _______ ______ X _________ = _______________ 5. ___________ _______ ______ X _________ = _______________ Name of Commodity Price Quantity Total Investment 1. ________________ ________ X __________ = _______________ 2. ________________ ________ X __________ = _______________ Total investment= _____________ (cannot exceed $10,000) OracleORCL ,323 NikeNKE ,458 PfizerPFE ,388 ExxonXOM , FordF Lean Hogs , Wheat , My portfolio is diversified three ways 1. Industry 2. % of money 3. Price of stock Spend all of your $10, looking up stocks Read thelooking up stocks handout to find answers to your questions. Not all companies are publicly traded. Some companies are owned by bigger companies and do are not traded under the company name. - searchcompany stock price Some companies have multiple stocks. Random Walk Theory You can do just as well picking stocks by throwing a dart at the list of stocks on the financial page as you can be spending time and effort doing research or listening to a particular adviser, broker, or strategist. Why is the stock market important to the overall economy? Why would a person want to invest in the stock market? Why would a company want to go public?