The
Stock Market Unit break downWhat is the stock market, how do stocks work. 10/29Intro; why you should invest, what it can do for your future. Discuss salary for investment bankers 4:38 2:42 2:51Why do you invest article with questions. 15 min to complete. Then go over. Investing isn’t just stocks, but how saving money and having a plan will allow you to have financial freedom. Roth IRA; types of stocks 10/30 Pyramid and Difference between Dow Jones, NasDaq, S & P 500 Investment 10/31 MAD Money11/1 how to read a stock table and read online tables (What to look for) (News, etc,) Infrastructure, defense, real estate amazon)11/5-11/7 Inside Job11/8- Research and log various companies stock information (yahoo finance)11/12- Picking a certain amount of stocks and shares (Given $1,000) questions, why did you choose those stocks, etc.11/13- Choose 2 companies that you invested in, write a paragraph about them explaining what types of companies they are, why they enjoy success, how they could be more successful and the type of impact they have on consumers.Name: _______________________Investing, And Why It MattersDo you have the discipline to save when it matters most?If there is one aspect to take away from this class; it’s the next two weeks. Your long-term financial security depends on your attention. For most recent graduates, investing isn’t their first thought when waking up in the morning, nor should it be. But if you haven’t thought about it by your second cup of coffee, you may want to revisit your routine. Just as you are never too old to stop investing, you are never too young to start investing. You invest in certain aspects of your life all the time, without even realizing it. ______________________________________________________________________________ Begin Saving and Investing Now.______________________________________________________________________________ Now?! Yes, now, however modestly. There are two reasons for this. First, anyone under thirty, and maybe under forty would be foolish to expect a “full” Social Security check once you reach the eligible age. The average?Social Security?benefit was $1,413.37 per month in June 2018. ... However, a worker would need to earn the maximum taxable amount, currently $128,400 for 2018, over a 35-year career to get this Social Security payment.Sure, you have been making contributions at (or since) your first job, but Social Security has one striking similarity to a Ponzi-Scheme (a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.) The funds paid out depend largely on new contributions (or investments). In the case of Social Security, the number of recipients is growing faster than the number of contributors, and Social Security payouts are unlikely to remain at current levels. “There seems to be some perverse human characteristic that likes to make easy things difficult.”- Warren Buffett The second and more important reason for starting to invest early is compound interest. Compound interest is money earned on money earned. Sounds great, right? But what does it mean? Suppose that you were to save $1,000 every year until you retire at the age of 67. Let’s also assume that you earn 5% in compound interest on those savings. Instead of earning $50 each year on each thousand dollars saved, you will actually earn more because of that “money earned on money earned.” The money you save is constantly growing, constantly increasing your investment returns. But that’s just a start. Take a closer look at what can happen over the long-term. Total savings at age 67 (if you save $1,000 every yearStarting atReg SavingsEarn 5% simple interest Earn 5% compound interest Age 20$47,000$103,400$187,025Age 30$37,000$72,150$106,709Age 40$27,000$45,900$57,403Age 5017,000$24,650$27,132If a picture is worth a thousand words, then the Total Savings table might be worth $187,025 to every twenty-year-old and has the potential to be substantially more. That $187,025 represents the amount of money you will have 47 years from age 20 by saving $1,000 a year and earning 5% compound interest. What is interest?Compounding is often referred to in relation to interest. Interest is essentially a reward for lending money. Banks charge interest when they lend money for mortgages or car loans, and credit card companies charge it, too, when you carry a balance of debt on your card. You can?collect interest if you have money in certain bank accounts or other accounts. That's because the money you have in your bank account is available for the bank to use, such as when it lends money to other customers. Thus, it rewards you for leaving your money with it.Interest comes in two primary varieties: simple and compound. If you have $1,000 in an account that pays you 3% simple interest annually, you'll collect $30 each year. If the interest is compound, then you will get $30 in your first year, and if you have $1,030 in your account the next year, you'll collect 3% of that, or $30.90. That's compounding doing its thing.?What is compounding?Compounding is happening when your investment grows each year -- and when the amount it grows by also grows. In other words, your investment generates earnings, and then those earnings generate earnings of their own. It's a relatively simple concept, but with mind-blowing possibilities, as the longer you let your investment grow, the more rapidly it will grow. Check out this example of a single $1,000 investment growing at 10% annually:Bank accounts earn compound interestBank accounts are classic compounding vehicles. A key feature of most savings accounts is the interest they pay, which will typically be higher than interest you can earn on checking accounts. (Many checking accounts pay no interest at all.You can also earn compounded interest in money market accounts and certificates of deposit (CDs).But if you haven’t already begun, what’s the best way to start? For many, the most straightforward approach to long-term savings is your employer’s 401(k) plan. Available to most working people, a 401(k) plan represents a great financial opportunity. One reason is that many employers match a percentage of the contributions you make to the plan. This employer match is additional “free” money-money that will earn money with compounding. Those matching contributions can result in dollar amounts considerably greater than those you see in the right column of the Total Savings table. While economists frequently reference the idea that there is “no such thing as free lunch,” the company match (if your company does so) is about as close as you will ever come to getting something for nothing. If your company matches some portion of your contributions (contributing, say, 50 cents for every dollar you contribute) up to 3% of your salary, contribute 3% of your salary. If they match a portion of your contributions up to 6% of your salary, contribute 6% of your salary.Here’s another important rule. ______________________________________________________________________________Never cash-out your retirement plans early.______________________________________________________________________________There are substantial penalties and taxes associated with early withdrawals. They turn a winning investment into a loser. Except in the event of a true emergency, leave your retirement plan intact. I just bought a new car and paid cash for it. Since I only had $30,000 in my retirement plan, I cashed it out to buy the car. I figure I can get back to $30,000 in a few years.-31 year old workerYou’re kidding?! Friends and family should not let friends and family make early withdrawals from their retirement plans to buy $30,000 cars. There are many things in life you can’t control, so why mess up those you can control? Saving and investing is a decision that you can control.1. Why is it important to start investing early? 2. What is compound interest? 3. What is a 401(k)?4. Why should you never cash out of your retirement early?5. Explain what a company match plan is.Name _______________________Investing Subsection-The Roth IRADo you have a Roth IRA? If not, why not? The Roth IRA (Individual Retirement Account), established in 1997 by Senator William Roth by the Taxpayer Relief Act, is a relatively new (and exciting) way to save for retirement. Most high-school students have never been told that the next few years of their lives represent an opportunity to make hundreds of thousands of dollars. It’s true!______________________________________________________________________________ Consider Starting a Roth IRA Today.______________________________________________________________________________ The Roth IRA offers tremendous benefits to young investors. The most important of these is a unique provision that allows you, at age 59 ? to withdraw the funds 100% tax-free. Now, you might be thinking that 59 ? is a long way off and that surely you can delay your retirement contributions for another year or so. Yes you can, but by choosing to delay you are missing a great opportunity. Thinking of waiting another year to start? Think again. Why? “I always knew I was going to be rich. I don’t think I ever doubted it for a minute.”-Warren BuffettRemember the hundreds of thousands of dollars you can make? Here’s how:Investment ReturnsStarting at Annual InvestmentAnnual ReturnTotal Value at age 59 ? Age 18$3,0004.9%$405,019Age 22 $3,0004.9%$323,559Age 32 $3,0004.9%$176,690As you can see, by starting to save at age 18 instead of age 32, you can earn an extra $228,329 by age 59 ?. More importantly, once you hit the age limit, that cash is 100% yours, tax-free. It’s true; under current regulations, you won’t pay a penny in taxes on your gains. Although the benefit is delayed, the tax-free attributes are what make a Roth IRA valuable for young investors. In the case of a traditional IRA, taxes could reduce your savings by tens of thousands of dollars. Now lets assume you want to invest a portion of your portfolio in stocks (higher risk, higher reward) your interest could be 6.5%. Starting at Annual investmentAnnual returnTotal value at 59 ? Age 18$3,0006.5%$623,437Age 22$3,0006.5%$474,001Age 32$3,0006.5%$230,245By starting at age 18 versus age 32, you could earn an extra $393,192 by the time you reach 59 ?. If these calculations on investment catch your attention, take the steps to learn more. Do your own research and provide yourself with financial freedom. Simple rules for investing:If you don’t understand it, DON’T DO IT.If the person explaining it doesn’t understand it, DON”T DO IT.Take the time to learn about it; do your own research. Don’t start investing until you understand where your money will be and what it will be doing. The best time to start saving is NOW.What is a Roth IRA, who was it named after? Look at the chart. Is there a difference in the amount of money you can make if you start younger? Explain.Do you think it is worth it to start saving at the earliest age possible? Why? Why are Roth IRA different than 401(k)s? Types of Accounts to Invest inMutual Funds- open-ended?investment?companies that pool investors'?money?into a?fund operated by a?portfolio manager. This manager then turns around and invests this large pool of shareholder money in a portfolio of various assets, or combinations of assets.?(Pimco Total Return, VanGuard, American Funds Growth, VanGuard 500)Pro’s (Diversification, Expert Management, Liquidity (easy to trade), Convenience)Con’s (No control over portfolio, taxed on gains, fee’s and expenses)CD (Certificates of Deposit)- A certificate of deposit (CD) is a savings certificate with a fixed?maturity date, specified?fixed interest rate?and can be issued in any denomination aside from minimum investment requirements. A CD restricts access to the funds until the maturity date of the investment. CDs are generally issued by commercial banks and are insured by the?FDIC?up to $250,000 per individual.Pros-Safety, better return than savings account, fixed and predictableCon’s-Limited liquidity, Inflation risk, low return rateGovernment Bonds- A U.S. savings bond is a government bond that offers a fixed rate of interest over a fixed period of time. Many people find these bonds attractive because they are not subject to state or local income taxes. These bonds cannot easily be transferred and are non-negotiable.Pros-Limited risk, safe investment, little to no taxes, Cons-Penalties for cashing early, Read bond redemption datesCommodities- A commodity is a?basic good?that can be bought and sold. The purchase and sale of commodities is usually carried out through futures contracts on a commodities exchange. Examples of commodities include gold, silver, iron ore, copper, wheat, rice, coffee beans, sugar, salt, etc.Pros-different levels of growth, diversity, protection from inflationCons-Volatile, no income Stocks- Equities (or stocks) are shares of ownership in a company, usually publicly traded. As a shareholder of a company, you get to enjoy a?share of profits and see the value of your shares increase if the company is successful.Many famous companies (like Apple, Disney, and Coca-Cola) are publicly traded, giving individual investors the opportunity to own a piece of these large and successful businesses. Besides large-cap stocks, investors can also invest in smaller companies with the potential to grow bigger in the future.Pros- highest returns, income dividends (company earnings), diversified, liquidityCons-Short term volatile, wrong stock=risk of investment, takes time and knowledgeReal Estate- Real estate is property consisting of land or buildings. Real estate is divided into three broad categories – residential, commercial, and industrial.Pros-stable returns, rental income (think AirBnb), easier to understandCons- expensive, high costs involved, hands-on managementMoney Market- The money market specializes in very short-term debt securities (less than a year). If you’ve ever parked your money in a fixed deposit (certificates of deposits) at a bank, you’ve participated in the money market. The money market is also used by governments, institutions, and corporations to raise money in the short term.Examples of money market instruments include:Treasury bills?– short-term debt securities issued by national governmentsCertificates of deposits?– a time deposit usually with a fixed interest rate and time period offered by banks and credit unionsCommercial paper?– IOUs issued by corporations at a discount to face valueEurodollars?– a time deposit denominated in US dollars at banks outside the United States. It has no connection with the?euro?currencyMoney market fund?– a mutual fund that invests in money market instrumentsPros-Very safe returns, liquid (turned into cash quickly)Cons- Low returns, lose out on inflationReading a Stock Table<0>52 week Hi and LowThe highest and lowest price at which a stock has traded in the past 12 months, or?52 weeks.<1>TickerThis is the company’s stock symbol, and it represents the company's stock.? <2>Company NameThis is the name of the stock.<3>Volume 1000’sThe number of shares that traded the last day this stock traded.? The number is given in thousands, so you need to add 3 zeros to the number to get the actual number of shares traded.<4>HiThe stock's highest price the last day this stock traded.<5>LowThe stock's lowest price the last day this stock traded.<6>LastThe stock's last traded price.? Also sometimes called closing price.<7>ChangeThe amount of change of the stock's closing price and the prior trading day's closing price.OTHER IMPORTANT TERMS:Bear MarketA period in which prices fall, accompanied by widespread pessimism. Usually occurs when the economy is in a recession and unemployment is high.Bull MarketA period in which prices rise faster than their historical average. Can happen as a result of an economic recovery or economic boomDJIADow Jones Industrial Average. Averages the top 30 companies in the US and used as an indicator of the overall condition of the stock market.NASDAQAn entirely electronic stock exchange. Does not have a physical trading floor that brings together buyers and sellers. Instead, all trading is done over a network of computers and telephones.NYSENew York Stock Exchange. The largest stock exchange in the U.S., located on Wall Street in New York City.Reading a Stock Table (B)52 week Hi LowTickerCompany NameVolume1000sHiLowLastChange174.47 78.20AAPLApple Inc.11480173.90170.25173.721.5634.90 23.07VZVerizon Commun1229531.1830.9031.07-0.1949.67 13.66ANFAbercrombie & Fitch299931.6530.6931.500.1734.85 15.14DISWalt Disney Co.1395228.2927.7928.08-0.3433.64 10.77BKSBarnes & Noble Inc.116421.6020.2921.601.0344.88 16.70TIFTiffany & Co259038.1836.6938.180.83?1. What is the last trade price of the day for Verizon Communications? _______________ ?2. What is the difference between the daily high and low for Apple Inc. stock? _____________ ?3. What is the high of the day for Walt Disney Co? _______________ ?4. What was the lowest price of Abercrombie & Fitch stock in the past year? ______________ ?5. What is the stock ticker symbol of Barnes & Noble Inc.? _______________ ?6. Is Apple Inc's stock now worth more or less than yesterday's close? _______________?7. What is the Low of the day for Tiffany & Co? _______________ ?8. Which company's stock traded the most shares today? _______________ ?9. What company is represented by the Ticker VZ? _______________ ?10. What companies’ stock was less valuable today than yesterday? ________________ 11. How many shares were traded in the last day for Walt Disney Co? _______________ 12. How many shares were traded in the last day for Tiffany & Co? __________________13. If you had $250 to invest, which of these companies would you invest in; and how many shares?_____________________ __________________________________________ _____________________ <0><1><2><3><4><5><6><7>52 week Hi LowTickerCompany NameVolume1000’sHiLowLastChange29.20 5.87GEGeneral Electric Co13901215.4114.4015.350.6855.77 37.44KOCoca-Cola1657752.4750.9152.160.65476.80 247.30GOOGGoogle Inc.1972476.80470.05475.122.9865.47 45.79MCDMcDonalds1027254.3453.8854.23-0.161. What is the last trade price of the day for General Electric? _______________ ?2. What is the difference between the daily high and low for Coca-Cola. stock? _____________ ?3. What is the high of the day for Google? _______________ ?4. What was the lowest price of McDonalds’ stock in the past year? ______________ ?5. What is the stock ticker symbol of General Electric Co.? _______________ ?6. Is Coca-Cola’s stock now worth more or less than yesterday's close? _______________?7. What is the Low of the day for Google? _______________ ?8. Which company's stock traded the most shares today? _______________ ?9. What company is represented by the Ticker MCD? _______________ ?10. What companies’ stock was less valuable today than yesterday? ________________ 11. How many shares were traded in the last day for Google? _____________12. How many shares were traded in the last day of GE? _________________ 13. If you have $500 which of these companies would you invest in; and how many shares? _________________________ ____________________ _________________________ _____________________________________________ ____________________ Dow Jones Industrial Average?(DJINDICES:^DJI)Nasdaq?(NASDAQINDEX:^IXIC), S&P 500?(SNPINDEX:^GSPC).?But how should investors interpret movements in these indices??To better understand the mechanics of the market, let's break down each of these major indices and drill down into why each is different and also somewhat the same.The Dow JonesThe Dow Jones Industrial Average is the oldest, best known, and most followed of the major stock market indices. It is comprised solely of 30 large-cap companies. These companies represent a huge array of American business -- from consumer-facing to business-to-business, tech to manufacturing, domestic to international, and everything in between.?Two concepts make the Dow so popular. First, the companies in the index are huge, and taken together they legitimately represent a huge swath of the U.S. economy. So while there are thousands of publicly traded companies, these big boys are sufficiently large to effectively act as a proxy for all the other enterprises.The S&P 500 takes a slightly different approach to represent the movements of the broader markets. The index covers the largest companies that trade on the?New York Stock Exchange or Nasdaq Stock Market, weighted by market cap.The S&P 500 chooses component companies based on a few basic criteria. The stock must trade at sufficient volume with adequate market liquidity. The company's market cap must be above $5 billion. At least 50% of the company's stock must be part of the public float.The NasdaqFirst, let's clarify exactly what we're talking about here. The?Nasdaq?(NASDAQ:NDAQ)?is a stock exchange, similar to the New York Stock Exchange. It was, in fact, the first all-electronic stock exchange. That is not what we're here to discuss.We're talking about the Nasdaq Composite, another market proxy based on certain stocks being publicly traded. The Nasdaq Composite is based on the 4,000+ stocks being traded on the Nasdaq Stock Market. The difference is subtle, but it's worth understanding to avoid any confusion.Name: ____________________ Companies Separated by IndustriesFinance Berkshire Hathaway Wells Fargo CompanyJP Morgan Chase CoMastercard IncorporatedVisa Inc.Citigroup Inc.Bank of America CorporationHSBC HoldingsAmerican Express CompanyUS BancorpHealthcareJohnson & JohnsonPfizer Inc.UnitedHealth Group IncorporatedCVS Health CorporationStryker CorporationAetna Inc.Consumer GoodsApple Inc.The Coca-Cola CompanyNike Inc.Sony CorporationKraft Heinz CompanyGeneral MotorsTeslaCanonPepsiCo Inc.Honda Motor CompanyServicesAmazonFacebookThe Home DepotNetflixStarbucks CorporationTarget CorporationSouthwest AirlinesDelta AirlinesBestBuy CompanyDomino’s PizzaTask: Download the Yahoo Finance App or go to ; research the companies from above and log the information. For the last four boxes, look up your own companies and log the info!!CompanyTicker symbolCost NowOpenPrevious CloseYield % Name: ______________________Almost done!!!Now that you’ve researched some of the biggest companies in the world; understand the ins and outs of the stock market and all that it entails; its now time to put you to the test! You will now begin your investmentsYou are given: $1,000 Task: Pick any of the companies from above and spend your $1,000 on investments. You will include the company name, the cost of 1 stock, how many shares you will buy, and total money towards each company. You must spend on at least 4 different stocks; be creative!!!CompanyTicker SymbolCost NowShares Bought$ Towards companyExplain why you chose to make these investments?__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ................
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