Intro to Stock Market (High School)

Stock Market and Dirty Business : 

Stock Market and Dirty Business Justin ***** Portfolio Project 4

Table of Contents : 

Table of Contents The Stock Market What is it? History Stock market indices Symbols What investors look at Bankruptcy

Table of Contents : 

Table of Contents 2. Businesses today Common executive layouts Currently successful businesses and their services Holdings companies Monopolization Bill Gates & Microsoft Current conflict with Apple AT&T

The Stock Market : 

The Stock Market Section 2 “Every day I get up and look through the Forbes list of the richest people in America.  If I'm not there, I go to work.” "Money is only an idea. If you want more money, simply change your thinking." ~Robert T. Kiyosaki~ ~Robert Orben~

What is the stock market? : 

What is the stock market? The stock market is where a corporation can sell off pieces of itself (each piece called Stock) to individuals or other companies. The value of this stock is how the stock holders make money. This stock can traded under different indices, such as NYSE (New York Stock Exchange), DJIA (Dow Jones Industrial Average), NASDAQ, and S&P 500. Note that not all companies can be invested in. Only publicly traded companies (usually Inc., Corp.) can release stock. Partnerships and other similar types cannot. Section 2: The Stock Market

Major Stock Indexes : 

Major Stock Indexes New York Stock Exchange DJIA (Dow Jones Industrial Average) NASDAQ S&P 500 Section 2: The Stock Market

New York Stock Exchange : 

New York Stock Exchange In 1793, 24 men signed “The Buttonwood Agreement”, which set up the general trade procedures (such as commission), which layed the basics of trading. Later, in 1817, the New York Stock and Exchange Board was founded. This eventually became the New York Stock Exchange. Recently, they have merged with Euronext, a European exchange. The NYSE is the largest Exchange in the world. As of December 2006, the value of all listed companies combined was $25 trillion dollars. Manages many big-name stocks, such as Macy’s, McGraw Hill, Coca-Cola, Comcast, and many more. Section 2: The Stock Market > Indices

Dow Jones Industrial Average : 

Dow Jones Industrial Average Started in 19th century by Charles Dow, who was also a Wall-Street Journal editor at the time. Started off with a dozen stocks. Of those, only one is still listed today: General Electric. Ironically, many of the other original companies were broken up (and later renamed, purchased, or disappeared) after Antitrust laws were put into effect. Companies on it are also on other indices. Today, it consists of 30 big-name companies, including Microsoft, American Express, Home Depot, McDonalds, Wal-mart, and Proctor & Gamble. Section 2: The Stock Market > Indices

NASDAQ : 

NASDAQ Began trading in 1971 Began the solution of automated (computerized) trading systems, as opposed to over-the-counter methods. Has companies like Microsoft, Apple, Amazon.com, TiVo, and Dish networks. As far as high profile companies, they have a lot, but NYSE definitely has them outnumbered. Section 2: The Stock Market > Indices

S&P 500 : 

S&P 500 Created in 1957 Owned by McGraw Hill Lists the top 500 companies on NYSE and NASDAQ indices Think of a really popular company. If its regional, national, or international and has a lot of market share in the industry it is in, it is probably on the list. Section 2: The Stock Market > Indices

Symbols : 

Symbols Many times, company names can be very long, and it can be of inconvenience to people involved in the market. So, when a company enlists into an index, they choose a Symbol, which is a unique identifier for them, and usually is built off the letters of their name. For example, Microsoft is MSFT. Apple is AAPL. Electronic Arts is ERTS. Section 2: The Stock Market > Symbols

Market Instability : 

Market Instability Our market is driven by many factors, and every single one must be taken into consideration while forecasting future share values. Oil Price-per-barrel Inflation Interest rates Economic Volatility Section 2: The Stock Market > What Investors Look At

Insider Information : 

Insider Information Most of the time, a majority amount of stock is held by someone within a company (usually the CEO, chairman, or other high-up person). These people are at a high advantage, because they have inside information to top secret developments and company plans that have not yet been released to outside shareholders and the general public. If you own stock, it is a federal offense to talk with these people for advice, because it is unfair. Section 2: The Stock Market > What Investors Look At

Insider Information : 

Insider Information This has happened in the past, with one of the most popular cases being the Martha Stewart case. In 2002, Martha Stewart sold 3,928 shares of ImClone Systems, after she received tips from her broker Peter Bacanovic (who obtained the insider info) that the stock may suffer a large loss. She was criminally charged with “making false statements (two counts); obstruction of justice; securities fraud; and conspiracy to obstruct justice, make false statements, and commit perjury” (Wikipedia). She spent 6 months in prison and 6 months under house arrest (which must’ve been awful in that big mansion of hers), however by selling when she did, she avoided a loss of approximately $45,673. Section 2: The Stock Market > What Investors Look At

Price per share : 

Price per share Price per share is the amount of money you will pay to buy a share of stock in a company. For example, if a share of stock costs $52.19 and an investor buys 50 shares, it takes simple multiplication: 52.19 x 50 = $2609.50 total investment However, often times, that equation may look something like this: 150.29 x 123 = $18485.67 total investment Section 2: The Stock Market > What Investors Look At

What is looked at prior to investing: : 

What is looked at prior to investing: There are many things to look at. Many people make the mistake of just looking at the price per share history of a company, and if its on a growth curve, they buy. However, this is NOT good. While that strategy may work in the short term, a company’s growth in the price-per-share will eventually come to an end. So, how do you know it won’t end next week, next month, or next year? YOU DON’T. But there are ways to get a good prediction. Section 2: The Stock Market > What Investors Look At

What is looked at prior to investing: : 

What is looked at prior to investing: Factors taken into account when investing: Debts Assets Loans Liquidity Price to Earnings Ratio PEG (Price to Earnings growth) Also, investors always take into consideration the instability factors mentioned a few slides ago. If the market as a whole looks like it is going down into bad times, they might “wait until the storm has passed”. Section 2: The Stock Market > What Investors Look At

Price to Earnings Ratio : 

Price to Earnings Ratio Price to Earnings is the ratio used to give an idea of what a stock should actually be worth. This is useful because stocks can many times become overpriced due to a sudden spike in popularity, media coverage, and other factors. Basically, if a company is making too little money to support the value of the stock, the stock will eventually fall, and possibly at a very fast rate, meaning an investor may lose a lot of money if invested at that time. Section 2: The Stock Market > What Investors Look At

Price to Earnings Ratio : 

Price to Earnings Ratio If an investor notices that one of your investments is getting a bad P/E (it will usually become very high), then it may be time to plan on how you are going to handle that investment to avoid losing a large amount of money. Section 2: The Stock Market > What Investors Look At

Price to Earnings Growth : 

Price to Earnings Growth Price to Earnings Growth will help to determine if the value of the stock is too high to allow it to grow. The number should be the lowest possible, even below 1, if its really good. If the number is high, what is happening is the business is growing, but earnings cannot accommodate that growth. A friend of mine put this into great perspective in this example… Seneca Middle School: you try to build it, and you run out of money… yet, you continue to build it, and you go into more debt. Section 2: The Stock Market > What Investors Look At

What is looked at prior to investing : 

What is looked at prior to investing DEBTS These statistics show what debts the company has (which includes loans and other amounts owed to third parties). If it has a lot of these, the company will have a lot more interest payment and thus more to pay off. That, if not handled carefully and intelligently by the company, can cause bankruptcy, which can lead to a large loss of money if the investor were to put money into that company. ASSETS This includes anything that the company owns, such as subsidiaries, and how those companies are doing. Section 2: The Stock Market > What Investors Look At

What is looked at prior to investing : 

What is looked at prior to investing LIQUIDITIES This is basically how much money that the company, and everything it owns, is worth. It can help a great deal in determining whether or not the stock is overpriced for what the company is actually worth. Section 2: The Stock Market > What Investors Look At

Bankruptcy  : 

Bankruptcy  Just like many individuals, companies also want to be rid of all their debt. So they file for bankruptcy. Fortunately, it helps rid the company of debt. Unfortunately it has the power to make all stock in the company virtually worthless (or at least go down to the point where everyone has lost almost all their investments). In some cases, a creditor may force its debtors to file for bankruptcy, so that they can get some of their lost money back. Some recent companies that have filed for bankruptcy: Section 2: The Stock Market

Businesses Today : 

Businesses Today Section 3

Common Executive Layout : 

Common Executive Layout Section 3: Businesses Today Chairman/CEO (probably the owner or guy who started it) President Vice President Vice President Vice President Manager Manager Manager Manager

Monopolization : 

Monopolization Monopolization is the act of a company trying to eliminate all its competition so that it may fix prices any way it wants to and maximize profit. Although it is not such a big problem now due to Antitrust laws, it was more of a problem in the late 1800’s/early 1900’s, specifically during the industrial revolution. It is now illegal to monopolize.

Antitrust Case:United States v. Microsoft : 

Antitrust Case:United States v. Microsoft COMPANY BACKGROUND: Microsoft is one of the biggest reasons computer technology is where it is today. Founded by Bill Gates in 1975, when he began to code for beginning computers Bill Gates has been known to “play dirty” and use dishonest, deceiving business strategies in order to gain the upper hand.

Antitrust Case:United States v. Microsoft : 

Antitrust Case:United States v. Microsoft WHAT HAPPENED? When the WWW began to head to widespread home usage, a new fight emerged: for the best internet browser. Microsoft developed Internet Explorer, Netscape developed the Netscape browser, and there were other browsers as well. Using the power they had (which was the mass-distribution and dominance of the Windows OS), they promoted their browser by building Internet Explorer into Windows 95. They threatened to revoke Windows licenses to any PC manufacturer which supported a different operating system, effectively forcing the PC manufacturers to listen (at the time, there was really no OS that was as user-friendly as Windows was, so not having Windows would lose a lot of business for them)

Antitrust Case:United States v. Microsoft : 

Antitrust Case:United States v. Microsoft WHAT HAPPENED? Nothing. They did not successfully break up Microsoft, as it was thought mainly that it was not a Coercive monopoly (intentional), but unintentional. Microsoft now pretty much has an anti-antitrust law barrier with regards to what they do with the Windows operating system. Also, they no longer have a monopoly, due to the rising amount of market share that Apple has with its Mac OS X, as well as the people that use an open-source OS called “Linux”.

Holdings Company : 

Holdings Company A holdings company is a corporation whose sole purpose is to buy and own other corporations. Holdings companies were once much more powerful then they are now, and were able to own all companies within one market to form a monopoly. However, due to antitrust regulations from the federal government, they will not buy up all their competition, in fear of being forcefully split.

Works Cited : 

Works Cited http://en.wikipedia.org/wiki/NYSE http://www.nyse.com/about/history/1089312755484.html http://www.nyse.com/pdfs/NYSEEuronextTimeline-web.pdf http://en.wikipedia.org/wiki/Stock_market http://en.wikipedia.org/wiki/DJIA http://en.wikipedia.org/wiki/S%26P_500 http://en.wikipedia.org/wiki/Microsoft http://en.wikipedia.org/wiki/United_States_v._Microsoft Note: All data I used from Wikipedia, I made sure was legit using the External Links sections on those pages.