The Stock Market

The Stock MarketIts Time to Make some Money!!!

1InvestingWhat does it mean to say I invested my money?

Why Invest?Now that we know what it means to invest we need to discuss the more important question of Why would we invest.Can anyone think of why investing your money is a better option than saving it?

What is the Stock Market?It is a public market for the trading of company stock at an agreed price.

So What is Stock?Stock is purchased in shares.Each share represents part ownership in a company.The more shares you own. The more of the company you own.

How do you purchase a stock?Bank AccountPut your money here.Brokerage AccountPut your money here.Is connected to a stock market.Can purchase stocks directly from this account.Think of the e-trade baby commercials. They are advertising a brokerage account.

Why do companies issue stock?If a company wants to grow it needs money.If it takes out a loan from the bank it owes the bank money and needs to pay them interest.When you issue stock you raise money WITHOUT going into debt.

Debt = Why would you buy stock?When a company makes money the price of its stock goes up.If you bought the stock when it was priced at $10 and the company has been making moneyThe price might later be $15.You could then sell your stock and make $5 on each share.

An ExampleYou Buy 500 shares of Nike on Jan 1.The price for each share on that day is $50.Nike releases news that it has discovered a new shoe technology that will allow you to run faster and jump higher.People get excited about Nike and expect them to make more money.

An ExampleMany people want to share in these profits so they want to be part owners of Nike.They purchase shares of Nike just like you already did.The difference is that the price is no longer $50.The price changes by the SECOND and can rise and fall.In this case it is rising.

An ExampleSix months later you decide to sell your shares in Nike.The stock price on that day is now $75.How much money did you just make???500# of SharesXPrice Difference25=Profit12,500

What is the NASDAQ?It is a stock exchange.That means is it where people buy and sell stocks (ownership in a company).As a general rule it is where most technology companies are traded.

What is the Dow Jones?Often referred to simply as the Dow.It is an index (think average) of 30 very popular stock prices.It is believed that by looking at the companies in the Dow that you can get a feel for how the overall market is performing.

As an investor you hope the Dow isWhat is a Bull Market?An extended period of time when values on the stock market are rising.

=What is a Bear Market?An extended period of time when values on the stock market are FALLING.

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What is a portfolio?It is a collection of stocks owned by an individual or institution.The total value of your portfolio is equal to the sum ofSUM of each (Stocks qty X Current Price)

ReviewWhat is a stock market?What is a stock?What is the Dow Jones Industrial Average and why do people pay attention to it?What is the NASDAQ?What does investing mean?Give me one reason why it is important for ALL people to understand investing.If you were buying stocks would you want to purchase your stocks before the START of a Bull or Bear market?

Your Homework PortfolioUse the sheet you were just given to select your four stocks.These stocks will make up your portfolio.If your parents would like to compete against you please have them pick their portfolio.This is due at the beginning of next class.Use finance.yahoo.com