Stock Market Test

Individual investors invest in

invest in companies on their own

What are stock tickers

- A group of letters to identify a corporations trading data -A tick is any change in the price of the security - Typically these are similar in looks to the companies name - Between 1-5 characters which are typically letters

Cons of public stock

- Always have to do what would please the public - Need approval of shareholders to make decisions - Have to disclose financial statements

Make a plan

- Decide to pick one or many stocks - Pick a strategy - Do your research - follow through

5 Important Q's of investing

- How does $ grow - Why should I invest - When should I invest - What are the ways that I can invest - What are the risks to investing

Pros of private stock

- Provides infusion of capital - Introduces stronger management - Can keep company values Ease debt

How many votes per stock are shareholders USUALLY given

1 vote (except in special cases)

Steps for person plan for investing (8)

1. Establish realistic goals (growth plan) 2. Determine the amount of money needed to meet goals 3. Specify the amount of money available to fund your investments 4. List different investments you want to evaluate 5. Evaluate risk and potential return for each 6. Reduce possible investments to a reasonable money 7. Choose at least two different investments (research) 8. Continue to evaluate your investment program

A Low P/E ratio is generally better than a high P/E ratio

A Low P/E ratio is generally better than a high P/E ratio

stock market bubble

A bubble is an economic cycle that is characterized by the rapid escalation of market value, particularly in the price of assets. This fast inflation is followed by a quick decrease in value, or a contraction, that is sometimes referred to as a "crash" or a "bubble burst."

Reducing the float

A company can use some of it profits to buy back some of it own stock. This reduces the number of share available for purchase. This drives the stock price up

Income Statement

A financial statement showing the revenue and expenses for a fiscal period. (companies financials)

Mutual funds

A mutual is a collection of investments such as stocks owned by the investor and managed by a professional money manager. This form of investing is not very risky because your money is managed by a professional. You get to decide what companies you invest in for a mutual fund.

What is a stock

A stock is an equity investment. If you buy a stock in a corporation, you own a small part of that corporation and are now a stockholder or shareholder.

Dividends

Dividends are given to shareholders as a gift for investing in their company. Sometimes when a company makes a high profit they will give their investors a dividend; Companies with dividends are usually chosen at a higher rate as opposed to companies without them.

Reverse Split

Exchanges more shares for fewer, causes price to rise

Price earnings ratio

In essence, the price-to-earnings ratio indicates the dollar amount an investor can expect to invest in a company in order to receive one dollar of that company's earnings. Current price/EPS= P/E

Diversification

Is the main keys of maintaining a balanced portfolio Recognize the different ways that stocks can be grouped

Where can you find tech companies

Naztech

ROA

ROA: Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets. ROA gives a manager, investor, or analyst an idea as to how efficient a company's management is at using its assets.

Some hunt for stocks, --------- Buying your own company's stock can be -------------- Risky if it is the only stock you own

Some hunt for stocks, some buy stocks because they use the company's product Buying your own company's stock can be beneficial Risky if it is the only stock you own

In one statement what an investor needs to know

Something about the company before they invest in the company's stock

Looking for the leaders

This refers to when an investor look for a company that is leading in it industry with a promising future.

Stock vs Share

are used interchangeably quite often, however they don't mean the same thing Share - unit of ownership Stock - Outstanding capital of a corporation

IPO provides what for compaines

capital/money; opportunity to obtain capital by offering shares through the primary market.

Stock buybacks

decrease the supply and artificially bump up the price

Four ways of research

financial press, professional research(have better access to news), companies, SEC filings(Because it's unaudited it's less reliable than a 10-K and 10-K's can be super long and dry)

Market order

is an order to buy or sell a security (a stock at the current market price) immediately

limit order

is an order to buy or sell a security (stock) at a specific price or better

Stop order

is an order to buy or sell a stock once the price of the stock reaches the specified price, known as the stop price.

When stock market bubbles burst

it wrecks havoc on the whole econ

Public corps. helped build the

middle class

Split stock

more shares are created to be traded at a lower price but total value of the company stays the same. Beneficial to investers

How long must stockholders own stocks in order make a proprosal

over a year and all people can make proposals for stock company(proposal must meet the requirements of the SEC(Securities and Exchange Commission)

Stock Market

people buying and selling tiny pieces of companies based on how they think those pieces will be worth in the future

preferred vs common stock

preferred: - High Dividend Very Stable -Little Growth - Low risk Common: -Potential of High Growth -High risk -Dividend is low and not guaranteed

IPO is

refers to the process of offering shares of a private corporation to the public in a new stock issuance.

Laying off workers, closing factories, keep wages low; things that are bad for the economy overall, but are great for the company's

short-term profits

An IPO offers what to public

stocks

What do companies do with dividends

they reward shareholders

Unicorn status

this stage of growth will occur when a company's value has reached ~$1 billion,

Can all stock holders make proposals regardless of amount of stock

yes

Do stock holders with more stock owned also have more voting rights

yes

Cons of Private stock

- Service quality driven by profit motive - Redistribution of wealth into a few hands (rich get richer)

Stock tables contain valuable information of certain stocks

52 Week High and Low, Net Change, Name, and Dividends

Buy

Buy a stock if you don't own it Buy more of a stock you have

Earnings Per Share (EPS)

Earnings per share (EPS) is calculated as a company's profit divided by the outstanding shares of its common stock. The resulting number serves as an indicator of a company's profitability. The higher a company's EPS, the more profitable it is considered to be.

IPO stands for

Initial Public Offering

Hold

Keep a stock you currently own

What kind of stocks do institutional investors own

Pesions, mutual funds, and hedge funds

Sell

Sell a stock you currently own More buy recommendations than sell

Private Stocks

Shares = sold to a limited group of investors

Something to remember: Even if a companies profit looks promising at the beginning there could be a massive dips in income

Something to remember: Even if a companies profit looks promising at the beginning there could be a massive dips in income

What are stock tables

Stock tables contain valuable information of certain stocks

What is preferred stock?

Stocks that have PRIORITY TO DIVIDENDS before the common stock. Traded on the Secondary market. These tend to be a safer option for investors.

Investors generally use this order to limit a loss or protect a profit on a stock that they have sold short. It is entered at a stop price below the current market price. Investors generally use a sell stop order to limit a loss or protect a profit on a stock they own.

Stop order

Blue Chip Companies

The largest and more consistently profitable stocks

Break-even analysis

The point is the level of production at which the costs of production equal the revenues for a product.

Cumulative voting

Votes may be divided HOWEVER THE SHAREHOLDER WANTS

Warren Buffet

Warren- invested for long-term rather than short; he researches the company before investing.

What type of market are we in

We have been in the longest bull market in modern history- from 2008-2009 Financial Crisis to March of 2020

Buy ins

When choosing stocks you should buy shares when they're low (so you can make more profit when you buy them cheap)

Bull market

a market in which share prices are rising, encourage buying

Market Exposure

having a company's stock listed on an exchange could attract the attention of mutual and hedge funds

brand equity

having a listing on a stock exchange also affords the company increased credibility with the public, having the company indirectly endorsed through having their stock traded on the exchange.

It is best to sell a stock when the stock is high or low

high

Percent yield

tells you the amount of dividend as a percentage of the current price

What is the easiest way to buy/sell a stock

the easiest way to buy a stock is to find a random stockbroker website the easiest way to sell a stock is to get back on the stockbroker you have chosen and just select the stock you want to sell and sell it.

Statutory voting

votes must be divided EVENLY by candidate

Market cycle

what goes up must come down

Reasons why a company would use IPO

- Making more money!! - Companies can offer securities in the acquisition of other companies - Employees get stock benefits which make the companies more attractive to talented people - Chances of getting a loan is higher - exit strategy for the company's founders and early investors, realizing the full profit from their private investment.

Over The Counter Trading

- Many small and new companies are not listed on either Nasdaq or a traditional market -The term originated when investments were bought over-the-counter at the brokers office - Many are inexpensive and thinly or infrequently traded

Pros of Public Stocks

- Selling shares gives the owner access to more capital - Reinvest the capital from the shares back into the company - Can increase public awareness of the company

Steps of research

- Start with the company's reports - Understand the basics of the company -Research the company's leadership - Ensure your values align with the company's

NYSE (New York Stock Exchange)

- The first stock exchange in America was the New York Stock Exchange - Brokers gathered on a centralized trading floor to buy and sell shares - Buying and selling stocks was auction-style

Preferred stocks

- These Equity investments are listed separately from the company's common stock. - easier to recover some of your investment if the company fails. - The prices change very little and the dividends aren't increased. - Preferred dividends are paid before common dividends, and are often guaranteed. - You can buy them the same way as common stocks. - Safer to buy. Harder to make crazy amounts of money.

Institutional investors

- are big organizations that make large exchanges - typically own more stock, causes more voting power

Name examples of what you look at while evaluating a company

- background - how profitable - P/E - stability - Earnings growth - Leadership trust worthiness - Dividends

NASDAQ

- first electonic stock; opened in 1971 - two divisions is the National Market(many big corporations) and Small-Cap Market (smaller/local/upcoming businesses)

New York Curb Exchange-AMEX (American stock Exchange)

- founded in 1841 - had proposed a publicly traded company rather than a private association

What is a proxy

- is a legal document given to shareholders - outlines planned changes that require approval - Must present all shareholder proposals - Asks shareholders to elect a board of directors - Must return proxy by mail in order for vote to count

Things to keep in mind

- look for tends in earning growth - Does the company pay its dividends - Does the company have effective leadership - Long-term strength and stability

How to choose stock

- make a plan - stay up to date on current events - use that knowledge to make your decision

The most common types of orders are

- market orders - limit orders - stop-loss orders

How to vote

- online - electronic ballot - phone - mail proxy

Two varieties of analysis

Buy side - Created and used by institutional investors Sell side - Designed for individuals like us

Best time to buy and sell a stock

Buy: 9:30-10:30(because it has the whole day to grow and time to benefit you.) Sell: 4pm then the stock will not be doing you any good over the night when the market closes.

This order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.

Limit order

This order, when the stop price is reached, a stop order becomes a market order.

Stop order

What does it mean when ROE is higher than ROA

When the ROE is higher than the ROA it could mean the use of leverage to boost profits.

Bear market

a market in which prices are falling, encourage selling

This type of order guarantees that the order will be executed, but doesn't guarantee the execution price. It is generally will execute at or near the current bid (for a sell order) or ask (for a buy order) price. *However, it's important for investors to remember that the last-traded price isn't necessarily the price at which a market order will be executed.*

a request to buy or sell a stock at the current market price

It is best to buy a stock when the stock is high or low

low

Are earnings or profits more important when evaluating a company

profits

Why do companies issue stock?

- raise money - start-up costs - no loans/interests to pay - stockholders not have voting rights - improvements

Common stock

- represent ownership in a corporation. - entitle you to collect dividends if the company pays them. - can buy them from a traditional broker, online brokerage, or a direct purchase. - Prices fluctuate a lot, and it can be hard to recover your investment if the company fails. (more populat)

indirect advertising

- the filing and registration fee for most major exchanges includes a form of complimentary advertising

Watchlist

A watchlist is a list of securities monitored for potential trading or investing opportunities. Investors track the list to analyze price movements and spot trading opportunities.

Profit vs. Revenue

Profits are the financial gains of the company after taking into account the money they spend too; Revenue is the amount of money the company makes. Profits are more important to look at because it shows how profitable and valuable the company is.

ROE

ROE: Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders' equity. Because shareholders' equity is equal to a company's assets minus its debt, ROE is considered the return on net assets.

Regular growth

Seeing a company's value go up because of a new campaign strategy or advertisements is usually a better sign than a company's value going up because of a new release, which will most likely be temporary.

What is a common stock

Shareholders share in the increase and decrease of the stock and dividends aren't guaranteed. These stocks tend to have more growth but more risk

Public stocks

Shares = sold in stock market with the initial public offering (IPO)

S&P 500 vs DOW

index tracks 500 of the largest companies on both exchanges while DOW only follows the 30 companies it considers most important

buy stop order

is entered at a stop price above the current market price.