provides information on what a company does, its financial performance, as well as its plans for the...

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Buy, Sell or Hold What Causes Stock Prices to Change

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Page 1: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

Buy, Sell or HoldWhat Causes Stock Prices

to Change

Page 2: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

Provides information on what a company does,

its financial performance, as well as its plans for the future

Companies with more than $10 Million in assets whose stocks are held by more than 500 owners are required to file annual and other periodic reports

Annual Report

Page 3: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

www.nyse.com www.nasdaw.com Company website home page

Getting a Company’s Annual Report

Page 4: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

The money collected for providing a product or

service

Revenue

Page 5: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

Total earnings after all expenses have been

paid

Net Income

Page 6: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

What remains after subtracting a company’s

costs from its revenue. Profit is a company’s reward for taking a risk and successfully producing what people want to buy at prices they are willing to pay.

Profit

Page 7: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

People buy to make a future profit People buy to save for retirement

Why People Buy

Page 8: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

People sell to collect their profits, or protect

against further loss because the stock price is dropping

Why Sell

Page 9: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

People hold because historical trends suggest

that over the long-term, stocks have the greatest return

Why Hold

Page 10: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

Make an educated decision Look at the annual reports for the company

How do you know the right action to take?

Page 11: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

It is extremely important to research other

companies in the same industry Check the revenue and profits from your

companies and compare them to other firms in the same industry

If the other companies are doing much better, you would tend to sell.

If they are doing worse, you would tend to hold

Sector Analysis

Page 12: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

Check current events surrounding companies Check how the sector is performing This is important because if a sector is

growing, you may still want to purchase the stock despite the poor performance of other companies

If the sector is collapsing, you may want to sell even if your stock is outperforming

More Research

Page 13: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

A stock price is an indication of what investors

believe a company is worth Stock price not only reflects a company’s

value, it also reflects the investor’s expectations of future growth and earnings

Stock Price

Page 14: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

A number of factors contribute to the minute-

to-minute changes in a stock’s price Market forces such as supply and demand If more people buy a stock than sell it, then

the price goes up If more people sell than buy, the price goes

down

Price Influence

Page 15: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

News events together with public opinion play

a role in creating rises and dips in stock prices Reports on internal corporate activity, industry

trends, and national/international events are interpreted as either good or bad news by the public, who in turn determine whether a company is a good investment or not

Price Influence

Page 16: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

Projected earnings of a company Public companies report their earnings four

times a year (once each quarter) Wall Street carefully watches earnings results Analysts base their opinions about future

value of a company on its earnings projections

Other Data That Influences Stock Prices

Page 17: Provides information on what a company does, its financial performance, as well as its plans for the future  Companies with more than $10 Million

If a company’s earnings report is better than

analysts expected, the stock price rises If a company’s results are worse, stock price

falls