Stock Market Analysis and Personal Finance

Mr. Bernstein

Buying and Selling Stockspp 291-299

February 10, 2015

2

Stock Market Analysis & Personal Finance Mr. Bernstein

Buying or Selling Stocks: AMZN, Jan 29-Feb 3

3

Stock Market Analysis & Personal Finance Mr. Bernstein

Stocks PricingPrices of stocks go up and down constantly

Check the chart of one of the stocks you selected over 1 day, 1 week and 1 monthMovements theoretically based on the perception of future earnings and dividends an investor may receiveMovements may be caused by temporary supply/demand imbalances (or perception of…)Decisions for the majority of transactions are made by a computer algorithm

4

Stock Market Analysis & Personal Finance Mr. Bernstein

Brokerage accounts:Public securities primarily trade on exchangesAccess to the exchange is restricted to members only

How do exchanges compete and earn profits?What is the advantage of executing trades on an exchange?

Broker/dealers are regulated businesses which offer access to trading, securities safekeeping, accounting, investment advice or research, and other services

Brokers typically charge a commission for executing trades

5

Stock Market Analysis & Personal Finance Mr. Bernstein

Central Exchange:The Buttonwood Tree

How is a central exchange beneficial?

6

Stock Market Analysis & Personal Finance Mr. Bernstein

Multiple Exchanges:Smart Order Routing(“aggregators”)

Can brokers earn revenue by favoring one exchange in their order routing?

7

Stock Market Analysis & Personal Finance Mr. Bernstein

Brokerage accounts:“Long” positions = ownership“Short” positions = sell stock you do not own, then borrow shares to deliver to the buyer“Margin”: Investors can borrow funds to buy stocks, or borrow shares to sell short

How do brokers earn money by offering Margin services?

8

Stock Market Analysis & Personal Finance Mr. Bernstein

Gathering Information Many brokers offer research to aid investors and attract

customersWebsites post blogs from popular contributors to attract viewers and increase advertising revenuesWebsites offer news stories and limited historical data to attract viewers and increase advertising revenues