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Rules regarding PowerPoint

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  Association.

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Student Investment Association

• The path to financial freedom
• Steven Savickas Panos Grivakis

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Announcements

• Sign in on the attendance sheet
• Paid members (39) receive copies
• Check Websites for updates.
• Next meeting Wednesday February 25th 715 pm 119
  Eppley
• E-board meeting Sunday 1130 am Business Library

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How do stocks work?

• Market price
• Bid price
• Ask price

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What is the single most important thing an
investor should know?

• Loeb was a highly successful investor and
  preached cutting all your losses short. And for
  me, this is rule 1. You must always protect your
  investment account. Particularly if you invest on
  marginm(use borrowed money) cutting losses is
  absolutely essential. Whether youre a new or
  experience investor, the hardest lesson to learn
  is that youre simply not going to be right all
  the time. William J. O'Neil
• Loeb it was 10

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Keys to success

• As a new investor, be prepared to take some small
  loses.
• Always cut your losses 8 below purchase price.
• Persistence is the key when learning to
  investing. Dont get discouraged
• Learning to invest doesnt happen overnight. It
  takes time and effort to become successful at it.

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Websites

• www.aaii.com
• www.investors.com
• www.fool.com

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The average person generally falls into one of
two categories.

• The first believe investing is a form of
  gambling they are certain that if you invest,
  you will more than likely end up losing your
  money. Often these fears are driven by the
  personal experiences of family members and
  friends who suffered similar fates or lived
  through the Great Depression. These feelings are
  not ground in facts and are the result of
  personal experience. Someone who believes along
  this line of thinking simply does not understand
  what the stock market is or why it exists.

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Stock market

• The second category consists of those who know
  they should invest for the long-run, but dont
  know where to begin. Many feel like investing is
  some sort of black-magic that only a few people
  hold the key to. More often than not, they leave
  their financial decisions up to professionals,
  and cannot tell you why they own a particular
  stock or mutual fund. Their investment style is
  blind faith or limited to this stock is going
  up. We should buy it. This group is in far more
  danger than the first. They invest like the
  masses and then wonder why their results are
  mediocre (or in some cases, devastating).

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Return in the stock market

• Over the last 50 years, stocks have produced
  returns that average 13 annually
• long-term bonds have averaged 5 annually
• short-term Treasury bills have averaged 4.5
  annually. These returns reflect the risk/return
  trade-off.

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Investing.

• There are four basic aspects that compose your
  personal investment profile
• Your personal tolerance for risk
• Your return needs and whether you need to
  emphasize current income or future growth
• Your time horizon
• Your tax exposure
• Each aspect of your personal investment profile
  will affect the trade-offs you are willing to
  make and your ability to reduce risk.

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Two types of investors

• Growth seek companies with strong earnings and
  sales growth, profit margins and ROE of 17
• Value search for stocks that are undervalued
  and have low P/E ratios.
• Conservative (lower risk, lower return)
• Aggressive (Higher risk, higher return)

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What is the Dow Jones Industrial Average (DJIA)?

• It contains 30 stocks that trade on the New York
  Stock Exchange (NYSE). The Dow is a barometer of
  how shares of the largest U.S. companies are
  performing. It is believed that by looking at the
  companies on the list, a person can get a general
  picture of how the market as a whole is
  performing. The Dow is perhaps the most quoted
  and followed index in the world.
• Ex. WMT MSFT GE INTC BA C AA GM KO

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What is the NASDAQ?

• The NASDAQ is an electronic exchange where stocks
  are traded through an automated network. It
  stands for National Association of Securities
  Dealers Automated Quotations System. As a general
  rule of thumb, it is where most technology stocks
  are traded.
• A quick way to tell if a company is listed on the
  NASDAQ is to check out the ticker symbol... those
  made up of four letters are listed here (e.g.
  Dell Computers DELL, Cisco CSCO).

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Standard and Poor's 500 (SP 500)

• Index of 500, of the largest U.S. stock
  companies.
• It serves as an indicator of how the U.S. economy
  is performing. Often these stocks are referred to
  as "the market"
• The SP 500 is the benchmark of the overall
  market, and frequently used as the standard of
  comparison in terms of investment performance.

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Stocks and market

• 3 out of 4 stocks regardless of how good they
  are, will eventually follow the trend of the
  general market.

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crash course in investing

• Stock Stock is ownership. A business is divided
  up into shares of stock and parts of the company
  (the shares) are sold to investors to raise
  money.
• Blue Chip A company that has a history of solid
  earnings, regular and increasing dividends, and
  an impeccable balance sheet. Examples Coca-Cola,
  Berkshire Hathaway, Gillette.
• Broker A person that buys or sells an investment
  vehicle for you (securities, bonds, commodities,
  etc.,) in exchange for a fee which is called a
  commission.
• Bear An investor who believes the market as a
  whole or a particular stock will decline. A bear
  is the opposite of a Bull.
• Bull An investor who believes the general market
  or a particular stock is going to increase in
  price.

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Investor words

• Market Capitalization A company's market
  capitalization (or "market cap" as it s
  frequently called) is calculated by taking the
  number of outstanding shares of stock multiplied
  by the current price-per-share.
• P/E Ratio A measure of growth potential,
  earnings stability, and management capabilities.
  Computed by dividing market price per share by
  earnings per share.
• Dividend A portion of a company's income that is
  paid out to shareholders on a quarterly or annual
  basis. Dividends are declared by the Board of
  Directors.

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Volume

• Is the actual number of shares traded
• Stocks never go up by accident
• There must be large buying, typically from big
  investors such as mutual funds and pension funds
• IBDs Volume Percent Change column track the
  average daily volume of every stock over the past
  fifty trading days shows you how much a stock
  traded above or below its average.

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How do you find the big winners?

• Strong sales and earnings were two most important
  fundamentals
• Youre looking for strong increase in quarterly
  sales earnings compared to the same quarter
  before.
• Look for accelerations

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Home Depot Example

• 1982 six months after Home Depots IPO( Initial
  Public offering)
• Earnings were up 140
• Sales in the 3 quarters accelerated from 104 to
  158 to 191
• Home Depot up 912 in less than 1.5 years form
  1982

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Rules For Stock Market Success

• Avoid cheap stocks. Buy higher quality stocks
  selling 15 a share and higher.
• Dont try to bottom guess or buy on the way down.
  Never argue with the market. Forget your pride
  and ego.
• Pick companies with management ownership of
  stock.
• Dont buy because of dividends or P-E ratios. Buy
  the 1 company in an industry in earnings and
  sales growth, R.O.E., profit margins and product
  quality.

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Rules For Stock Market Success

• Fundamental and chart analysis is essential to
  picking winning stocks
• Buy stocks coming out of price consolidation area
  or base is crucial in making large gains.

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Daily Graphs

• What stocks would you like to see?
• What's the ticker (stock symbol)?

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Why should I join the SIA?

• For 39 you get plenty of benefits
• Free investment book!
• If you sign up 3 of your friends, your membership
  is free!
• Access to IBD 1000 professional level research
  which offers technical chart and stock analysis
• Investment library of books, Audio CDs, Cassette
  Tapes for you to check out!
• Access to state of the art trading room!
• Learn about investing and the stock market!
• Your own Scottrade online account
• Professional Guest speakers from top firms.
• Great resume builder
• Meet new friends
• Plan your way to financial freedom!

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About Us

• NEXT MEETING
• WEDNESDAY, FEBUARY 25
• 715 PM 119 EPPLEY
• Student Invetment Association
• Steven Savickas Panos Grivakis
• MSU_SIA_at_hotmail.com
• http//www.msu.edu/investor

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Q A and Suggestions

• Answers to questions
• Suggestions or feedback