Beginners Guide To Stocks

What is stock?

∗ Stock is ownership in a company plan and simple

∗ Stocks are also known as shares

Types of Stock(Common)

∗ Common stock- Allows you to vote on members of the board (the board establishes policies and goals selects chief executives, approves annual budgets and sets salaries)

∗ Common stock is what you will see when you Google a company’s stock

Googling a Stock

∗ When you Google a stock you’ll see this

∗ A marketplace where the stock is sold and bought a.k.a. traded i.e. NYSE

∗ A Market index measures the performance of a few selected stocks(a portfolio) against other stocks on the market .The major US indices are the DOW,NASDAQ and S&P 500

∗ The circled letters are known as a ticker symbol and are used to identify a stock in the marketplace.

Ticker Symbol Cont’d

∗ Ticker symbols for options have symbols based on the stock they are derieved from for example an Apple(AAPL) option would be AAPL131019C00485000

∗ An option allows you to buy a stock contract( 100 shares ) at a certain price. This certain price is called a strike price

∗ Options expire but are good for quick sales

Options Cont’d

∗ There are two types of options: call options and put options

∗ When you exercise a call option you promise to sell

∗ When you exercise a put option you promise to sale at a preset price

Dividends

∗ Dividends are a percentage of earnings from ownership of a stock

∗ Preferred stockholders receive dividends before common stockholders

∗ Preferred stockholders usually don’t have voting rights

Types of Stock( Preferred )

Stock Classification(Sectors)

Stable(Defensive)∗ Utilities(Georgia Power)∗ Consumer staples(Tyson)

Volatile(Cyclical)∗ Basic Materials(Gold)∗ Capital Goods(Lockheed Martin)∗ Communications(Netgear)∗ Consumer Cyclical(LG)∗ Energy(Shell)∗ Financial(Visa)∗ Health Care(Tylenol)∗ Technology(DELL)∗ Transportation(Southwest)

Terms to know

∗ Ask-The price you’re willing to sell at∗ Bid-The amount you are willing to buy at

generally this is also the ask price∗ Bid Size-The number of shares you are

willing to purchase at the bid price∗ Close-The price at closing(4pm weekdays)∗ High-The highest price the stock was bought

for∗ Low-The lowest price the stock was bought

for∗ Market Capitalization-number of public

shares X price per share∗ Open-The price at open(9am weekdays)∗ Volume-The number of shares being traded

on the market

Terms to Know Cont’d

Change-The difference between the current price and the previous day’s priceMarket Index – A list of stocks on the market in a given group that give a picture of the current market conditions. NYSE-groups well established companiesNASDAQ-groups tech related companies

∗ Float-Total number of shares

∗ Short Float-The percentage of shares short in relation to the number of shares that make up a stock’s float.

Terms to Know Cont’d

1. Stock split-the number of shares are split and the value is halved.

2. Mergers and Acquisitions1. The smaller company is usually bought at a premium ex: If

the smaller companies stock is $10 a share and the larger company pays $15 a share then your stock is now worth $15 or a $5 check

How Company moves affect Stock

Investment Strategies

Investment Strategies

Long term

∗ Hold stock for a year or more and dump it for profit when prices go up a.k.a Buy and Hold

OR∗ Let dividend payments buildup∗ You pay higher taxes on short term

than long term

Short term

∗ You sell shares for profit quickly based on merger or buyout rumors

∗ Current short term buyout targets include Dish Network,Family Dollar,Realtor.com

∗ For Advance traders only

∗ http://finviz.com/screener.ashx?v=161&f=fa_opermargin_pos,fa_roa_pos,fa_roe_o10,geo_usa&ft=4&o=-roe

∗ The link above has filters applied that I use to determine in part what I will add to my portfolio at any given time

∗ Please make sure you compare companies from the same sector AND industry to get the most accurate picture.

∗ If you have any questions contact me : c.thornton0114@yearup.org

What to look for