The Stock Market

Stock Market Game

Objective:• To help get a better understanding of

stock markets, how they work, what factors influence them, and their volatile nature

• learn some rudimentary, but important, approaches to picking stocks for an investment portfolio.

Stock Market Game

What is a stock? • Stock is ownership of a company.

When you purchase stock or shares of a company your are becoming a part-owner of it.

• As owners of the company, shareholders are entitled to the earnings of the firm.

Stock Market Game

What is a stock continued…• Some profitable companies pay out

some or all of these earning to shareholders as dividends, while other firms will re-invest the earnings to grow the company.

• The underlying assumption being the shareholder will enjoy greater earnings in the future if the company grows.

Stock Market Game

Continued…• Investors will pick shares in companies

that are profitable (and are expected to stay profitable) or in companies that are expected to become profitable.

• As an investor, you should move up the pyramid only after you have built a strong foundation.

• comfortable with the idea of risking your money. • While higher rates of return at the top are tempting, keep this in

mind: there is no guarantee that higher-risk investments will actually give you higher returns.

Various Stocks You can invest in

• NASDAQ: National Association of Securities Dealers Automated Quotation System - The stock exchange that is concerned heavily with technology stocks

• The DOW JONES: Thirty of the largest corporations in America

• NYSE: The oldest and largest stock exchange in the US, with more than 1600 companies listed for trading.

• S&P 500: Short for "Standard & Poor's Corp." A well-known company that publishes credit ratings for certain bonds, a variety of financial reports covering other firms, and several stock indexes among other activities.; comprised of 500 top American companies; health of the US stock market.

• TSX:The largest stock exchange in Canada, traditionally home to a large number of natural resource companies.

Stock Market Game

Discussion• What makes a company profitable?• Name some companies that have good

products (or popular products) and probably have good sales?

• If you wanted to own any of these companies, which would you choose (top three ranking, for example)?