presentation - Brooklyn Public Library

Brooklyn Public Library
Mina Ennin Black
AGENDA
• WHY INVEST
• SAVING VS. INVESTING
• INVESTMENT TYPES
Risk Tolerance Quiz
• INTRO TO STOCKS
• STOCK EXCHANGES
• HOW DO I MAKE MONEY?
• CHOOSING STOCKS AND TRADING
• HOW DID YOU DO? EVALUATE YOUR
PERFORMANCE
2 Ways To Grow Your Money
Savings Accounts
Investment Account
What Is Investing?
Investing is putting your money
to use to make money on it.
Some examples of investments
are stocks, bonds, mutual
funds, and real estate.
WHAT’S THE
DIFFERENCE?
Savings
Investments
Goal
Short-term needs or
emergencies
Products
Savings Account, money- Stocks, Bonds, Mutual
market account, CD
Funds
Risks
None if FDIC insured
Varies depending on
product
Source of Return
Interest you receive from
money you deposited
Interest, Dividends,
Capital Gains, Capital
Losses
Key Advantage
Money is safe and easily
Accessible
Your return outpaces
inflation over long term
Key Disadvantage
Returns usually don’t
outpace inflation
Risk of losing money
Long-term growth
Source: IPT
3 Things You Should Know:
Understand Your
Current Situation
Never Invest
Money You Need
Pay off any high
interest debt first
Before You Invest
Set Your Goals: Be
Specific (ex. Save for
a new car
Pick A Date: When will you need
the money? – Time Horizon
The Stock Market
An everyday term used to talk about a place
1 “traded”
where stocks and bonds are
Companies
use the stock
market as a
way to raise
money
Did You
Know?
Size of the
world stock
market is $36
trillion?
Slide 8
1
Need to insert examples
Mina Black, 10/11/2012
STOCKS
Stocks: Shares of ownership in a company
What Does Stock Ownership Mean?
Voting Rights
Owning shares in Apple doesn’t mean you can go
help yourself to free Iphones at the Apple store.
HOW DO STOCKS TRADE?
On the Stock Exchange
Marketplace where brokers who
represent investors meet to buy and
sell securities.
Two Primary Exchanges:
New York Stock Exchange
NASDAQ
NEW YORK STOCK EXCHANGE
New York Stock Exchange
Founded in 1792
Face-to-face trading floor
Broker to specialist to broker
Stocks traded on NYSE: GE,
McDonald’s, Coke, WM
Floor of NYSE
NASDAQ
“Virtual” Over-the-counter
-No central location
-No floor brokers
-Trading done through
computers
Tech-heavy listings –
Example: Facebook
WHERE DOES STOCK PRICE
COME FROM?
Stock price is
Tied to how much investor’s perceive the entire company
to be worth right now
AND
How much the company is going to EARN in the future
WHAT CAUSES STOCK
PRICES TO CHANGE?
The easy answer…
Supply and Demand
More wanting to buy, less wanting to sell
Less wanting to buy, more wanting to sell
HOW DO YOU MAKE
MONEY?
Investors make money in stocks in two ways:
Dividends
Companies may make payment to shareholders as part of the
profits.
Capital Gains (CG)
Investors purchase shares in companies with the expectation
that the price of the shares will increase. This increase in share
value is a capital gain
Reading Stock Tables
Ticker Symbol
A unique identifier (usually letters) that
represent a particular security on an
exchange.
Source: Yahoo Finance
Price
The current or price of the stock.
Sometimes this will be listed as “Last
Trade” to let you know the last price
the stock traded at.
Source: Yahoo Finance
Change in Price
StocktheTables
TheReading
difference between
last trade
price and the price before that
Source: Yahoo Finance
The Exchange
You
can identify
which Tables
exchange the
Reading
Stock
stock quote you’re viewing is trading
on
Source: Yahoo Finance
Previous Close
The price that the last share of stock
sold yesterday (or the last day of
trading) sold at.
Source: Yahoo Finance
Open
The open is the price of the first share
of stock sold today
Source: Yahoo Finance
Bid & Ask
A bid is the highest price that a principle brokerage firm
has announced it’s willing to pay for a share of a specific
stock at a specific time. The ask is the opposite: it’s the
lowest price that a firm has said it’s willing to sell a
particular stock at
Source: Yahoo Finance
1Y Target Estimate
An analyst’s projection of what the
price for a single share of this stock
will be one year from today
Source: Yahoo Finance
Beta
Reading
Tables
The measure
of how aStock
particular
stock’s price moves relative to the
market as a whole.
Beta = 1: means the stock’s price moves exactly with the overall market
Beta > 1: means the stock’s price is more volatile than the market
Beta < 1: means the stock’s price is less volatile than the market
Source: Yahoo Finance
Next Earnings Date:
Expected date of when the company
will release their next earnings
Source: Yahoo Finance
Chart
Reading
Stock Tables
This is the information such as price;
volume, trade history in a chart form
Source: Yahoo Finance
SELECTING STOCKS
THINGS TO THINK ABOUT
•
•
•
•
•
NO ONE WAY TO PICK STOCKS!
NO FOOL PROOF FORMULA
COME UP WITH A STRATEGY: A method for picking your stocks;
Are you interested in a specific industry? Sector?
Don’t put all of your eggs in one basket
“Buy what you know. Stock tips are all around us. You can
spot a good stock before Wall Street does.” –Peter Lynch
STRATEGIES FOR STOCK SELECTION
1. Go With What You Know: You see
companies growing all around you.
1. Markets: Current and future – A project must
have customers today and even more
tomorrow or it isn’t growing.
3. Economic Cycle: Is the economy expanding
or slowing?
3. Avoid Obvious Risks
3. Selecting Stocks for the Stock Market Game:
STRATEGIES FOR STOCK SELECTION
1. Go With What You Know: You see
companies growing all around you.
•
•
•
•
What products do you really like?
What is popular among your friends?
Who makes it?
Do you think it will continue to be popular?
Make Sure To Do Your Homework: know what
the company does and how it’s doing
financially – look at news; their annual reports
If You Can’t Explain What The Company Does,
Then You Shouldn’t Buy It
BUYING STOCKS
You buy stocks through a broker
Markets are open from 9:30 to 4pm
Full service or discount broker
Commission: the fee you pay the broker to buy or
sell the stock
THE END