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Introduction to the Stock Market

Introduction to the Stock Market. The Basics of Stock Investing. Stocks. Investors buy shares (stock) in a company and then become part owners A company sells stock to raise money to expand their business Some companies pay dividends on their stock (similar to interest on a bond).

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Introduction to the Stock Market

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

  2. Stocks • Investors buy shares (stock) in a company and then become part owners • A company sells stock to raise money to expand their business • Some companies pay dividends on their stock (similar to interest on a bond)

  3. Key Stock Indices WHY INDICES: There are over 5,000 stocks! A stock index provides the average return of a basket of stocks • S&P 500 Index • Largest 500 companies by $ value • Dow Jones Index • 30 very large American companies • Nasdaq Index • primarily technology stocks • ETF’s = exchange traded funds • a way to invest in various stock indices by purchasing 1 stock • Example: SPY = SP500 index MDY = midcap index IWM = smallcap index

  4. A Stock Market goes through the business cycles too BULL or BEAR MARKET? . .

  5. Recent Stock Market History • Stock market hit a high in March of 2000 • 3 years of negative returns followed [2000,2001,2002] • 2003 SP500 +28.6% • 2004 SP500 +10.8% • 2005SP500 +4.9% • 2006 SP500 +15.7% • 2007SP500 +5.5% • 2008 -37.0% • 2009 +26.0% • 2010 +15.0% • 2011 +0.0 % • 2012 +13.0% • 2013 +29.6% Market recovery Market recovery Great Recession

  6. 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 stockperformance

  8. Building a 100,000 Portfolio • How many shares? • Depends on how many dollars you want to invest • What types of companies? • Many sectors to choose from • Do I spend all of my $100,000 • No more than $20,000 in one stock!

  9. Graphing Stocks

  10. Stocks in Dow Jones Index

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