Stocks

1. THE STOCK MARKET
•Why is it important to
understand how the stock
market works?
•What impact does the stock
market have on our overall
economy?

2. THE STOCK MARKET
WHAT DO YOU KNOW?

3. STOCK
Stock Stockholder or
shareholder
A share of
ownership in
a company
Owner of the
stock
Usually, a stockholder owns a very
small part of a company

4. WHAT DOES A STOCK REPRESENT?
• A LOAN YOU MAKE TO A COMPANY THAT THEY MUST PAY BACK.
• A PERCENTAGE OF OWNERSHIP OF A COMPANY INCLUDING ASSETS AND
PROFITS.
• A CONTRACT FOR A COMPANY’S GOODS OR SERVICES.
• STOCKS ARE JUST TOOLS USED BY INVESTORS TO MAKE MONEY.

5. WHAT DOES OWNING STOCK GET ME?
• INVOLVED IN MANAGEMENT DECISIONS
• ENTITLED TO SOME OF COMPANY’S PROFITS
• VOTE TO CHOOSE BOARD OF DIRECTORS
• APPROVE MAJOR CHANGES
• MERGER WITH ANOTHER COMPANY
• DEPENDS HOW MANY SHARES YOU OWN
• APPLE 5.575 BILLION SHARES OUTSTANDING
• OWN 100 SHARES
• OWN 0.00000179%
• CAN ALWAYS SELL YOUR SHARES

6. WHAT IS COMMON STOCK?
• MOST COMMON TYPE OF STOCK PURCHASED
• ONE VOTE FOR EVERY SHARE OWNED
• SHAREHOLDER MEETINGS
• ENTITLED TO RECEIVE DISTRIBUTIONS OF THE
COMPANIES PROFITS CALLED “DIVIDENDS”
• PAID BACK TO SHAREHOLDERS 4 TIMES A YEAR AS A
DIVIDEND

7. WHAT IS PREFERRED STOCK
• NO VOTING RIGHTS
• PREFERENCE FOR DIVIDEND
PAYMENTS
• MAY RECEIVE BIGGER SHARE
THAN COMMON STOCK
HOLDERS
• PAID FIRST IF COMPANY
BANKRUPT
• SELLS ALL ASSETS

8. WHAT IS PREFERRED STOCK?
• STOCK THAT GETS PAID DIVIDENDS FIRST
• STOCK THAT LETS ITS OWNERS VOTE IN SHAREHOLDER
MEETINGS
• STOCK THAT IS ALWAYS WORTH THE MOST
• STOCK THAT IS ONLY OWNED BY MANAGERS

9. WHAT IS AN IPO?

10. IPO – “INITIAL PUBLIC OFFERING”
• LARGE PRIVATE COMPANY
DECIDES TO “GO PUBLIC”
• ISSUES SHARES OF STOCK FOR
ANYONE TO BUY.
• RAISE MONEY
• ORIGINAL OWNERS ALLOW THE
PUBLIC TO VOTE ON SOME
MANAGEMENT DECISIONS
• IN EXCHANGE FOR THE CASH
RAISED IN THE STOCK SALE
• RE-INVEST AND HELP THE
COMPANY GROW.

11. HOW DOES AN IPO WORK?

12. WHY WOULD A COMPANY REMAIN PRIVATE
INSTEAD OF GOING PUBLIC THROUGH AN INITIAL
PUBLIC OFFERING?
Stay Private Go Public
Company make decisions based
on customer needs
Boost exposure to public
Not demands of Shareholders Enhance the ability to attract,
retain talent
Freedom for regulatory
demands (GOVT)
Use shares as employee benefit
Adjust to Business Environment
changes
Reduce the cost of obtaining
capital

13. TICKER SYMBOL
TICKER SYMBOL

14. WHAT MAKES UP A "TICKER SYMBOL" IN THE
UNITED STATES?
• BETWEEN 1 AND 5
LETTERS OR
NUMBERS
• THE FIRST 3 LETTERS
OF A COMPANY'S
NAME
• BETWEEN 1 AND 5
LETTERS ONLY
• BETWEEN 1 AND 7
NUMBERS ONLY

15. HOW TO FIND A STOCK’S TICKER SYMBOL
• FINANCIAL WEBSITES
• QUOTES OR GET QUOTES LINK
• TICKER SYMBOL LOOKUP

16. WHY DID INVESTORS START USING TICKER
SYMBOLS?
• IT WAS FASTER TO MOVE NEWS
USING TELEGRAPHS WITH
SHORT NAMES
• INVESTORS LIKED TO USE "TEXT
SPEAK" TO COMMUNICATE IN
CODE
• TO CONFUSE "CASUAL"
INVESTORS AND KEEP TRADING
TO PROFESSIONALS
• IT MAKES IT FASTER TO LOOK
UP MULTIPLE COMPANIES AT A
TIME ON A COMPUTER

17. STOCK
Stock Stockholder or
shareholder
A share of
ownership in
a company
Owner of the
stock
Usually, a stockholder owns a very
small part of a company

18. 2.4.7.G1
© Take Charge Today – March 2018 – Let’s Talk Stocks – Slide 18
“Black Monday”
Oct 19, 1987

19. This is what a panic looks
like..

20. 2.4.7.G1
© Take Charge Today – March 2018 – Let’s Talk Stocks – Slide 20
“Stock Market Crash”
March 9, 2020

21. What Defines a Bull Market
• Consistent Rising Prices
• General Exuberance or
Euphoria
• Fear of Missing Out
What Defines a Bear Market
• Consistent Falling Prices
• General Panic
• Fear of Losses

22. STOCK RETURNS – CAPITAL
GAINS
Market Price
Current price a
buyer is willing to
pay
Stocks sells for a
price higher
than what was
paid
Capital gain – unearned
income received from
the sale of an asset
above its purchase price
Stock sells for a
price lower than
what was paid
Stockholder will
lose money

23. What It Means to Buy a Company’s Stock

24. STOCK RETURNS - DIVIDENDS
Dividend
s
Share of
profits
distributed
in cash to
stockholder
s
Stockhold
er may or
may not
receive
dividends

25. 2.4.7.G1
© Take Charge Today – March 2018 – Let’s Talk Stocks – Slide 25
Ways Stock Values
May Change
1. The price per share or the dollar
value of the stock increases or
decreases
2. Stock Split occurs – shares
owned by existing stockholders
are divided into a larger number
of shares
3. A Merger of two companies
4. Dividends are paid

26. STOCK RETURNS – CAPITAL
GAINS
Market Price
Current price a
buyer is willing to
pay
Stocks sells for a
price higher
than what was
paid
Capital gain – unearned
income received from
the sale of an asset
above its purchase price
Stock sells for a
price lower than
what was paid
Stockholder will
lose money

30. Now that you know what it means to
own individual stocks, let’s see how
some popular stocks are doing in the
market!

33. HOW THE STOCK EXCHANGE
WORKS?
What comes to mind
when you hear the
term “stock
market”?
What is the stock
exchange and how
does it work?

36. NYSE VS. NASDAQ

38. NYSE.COM

39. NASDAQ.COM

40. HOW DO INVESTORS CHOOSE
STOCK?
Stocks, and Why Prices
Fluctuate?
Passive Investors vs. Active
Investors
Active Investors: Picking a
Stock
Finding your Comfort Zone