Presentation Transcript

1. Investment Options

2. Stocks Stock Prices determined by: Value of the company Historical Future Investment banks evaluation Herd instinct
3. Apple
4. Stock Market Indices Dow Jones Industrial Average S&P 500 Nasdaq
5. Dow Jones Industrial Average Most widely followed market indicator in the world Founded in 1896 Published by the Wall Street Journal Editors select 30 key stocks to track Representative of the American economy April, 2013 Dow broke 14600 for the first time
6. 30 Companies Tracked in Dow
7. Dow Jones Industrial Average www.finance.yahoo.com 4/4/13 Market Close
8. Standard & Poors 500 Founded in 1923 Composed of the stocks of 500 US companies Mostly Large Cap Companies (> $4B revenues) Leading companies in the leading industries Represents 75% of US equities
9. S&P 500 Values calculated by total market value of each stock (not just stock price) If measured like DJIA, would have value of 13,842 www.finance.yahoo.com 4/4/13 Market Close
10. NASDAQ National Association of Securities Dealers Automated Quotation system Launched in 1971 Worlds first electronic stock market Currently tracks the prices of more than 3,200 stocks from 37 countries across all industry sectors
11. NASDAQ www.finance.yahoo.com 4/4/13 Market Close
12. Stocks and Equities Bull or Bear Market? What’s led to growth? Federal Reserve’s actions Monetary policy Lower interest rates Purchasing Treasury Bonds Europeans investing in US
13. Bull Market Average equity return is 10% In 2008, the market declined 50% Will it continue to grow?!?!? Stock Market is a Leading Indicator Markets typically 9 months ahead of economy Is the Recession from 2008 over? What happens if interest rates rise again? Can you handle it yourself?
14. Mutual Funds Most popular investment vehicles for individual investors today (401K) Company that brings together money from many people and invests it in stocks, bonds or other assets Registered with the Securities and Exchange Commission, overseen by a board or directors or board of trustees and managed by a registered investment advisor
15. Mutual Funds Benefits Diversification Professional Management
16. Mutual Funds Classified by size and style Most common: Growth and Value Funds Large-Cap and Small-Cap International
17. Asset Type Growth Funds Fastest growing companies on the market Usually possess some sort of competitive advantage Most risky investment style Suitable for aggressive investors, or those with enough time to make up for short-term market losses Compare their historical earnings to the industry average Examples: internet, technology companies
18. Asset Type Value Funds Companies the market has overlooked Undervalued in comparison to similar companies Buy stocks and hold them until they turn around More sensitive to the economy Suitable for more conservative, tax-averse investors Examples: banks, steel companies
19. Growth vs. Value Performance
20. Asset Type Blend Funds Invest in both high-growth internet stocks and cheaply priced automotive companies Need to look at the fund’s holdings to determine level of risk
21. Investment Classes Large-Cap Funds Companies with market values of > $10 billion Less volatile than funds that invest in smaller companies Typically expect smaller returns Core, long-term holding (retirement savings) Examples: banks, oil companies, pharmaceuticals, etc.
22. Investment Classes Mid-Cap Funds Companies with market values between $2 billion - $10 billion Not as stable as Large-Cap, but potential for growth Usually do well in early phase of economic recovery More diversity Examples: finance, real estate, transportation
23. Investment Classes Small-Cap Funds Companies with market values between $300 million - $2 billion More volatile than large-cap Typically small companies that have just incorporated Likely to grow more quickly than larger companies Micro-Cap Funds Market values < $300 million Startups, takeovers, or about to exploit new markets High risk/high reward
24. Top 10 Mutual Funds in US Vanguard Fidelity American Funds (Capital Research) BlackRock PIMCO Franklin Templeton JPMorgan SSgA T. Rowe Price Federated
25. Assignment Research different Mutual Funds on the internet Select 6 different funds from at least 3 different companies using different investment styles and classes Provide the following information on each: