Western Day Traders

1
Western Day Traders

• The Essentials

2
What is a Stock?

• Stocks are equity securities, signifying that the
  owners of such securities have an equity
  (ownership) position in a corporation.
• show you a own a piece of the company
• Amount you own - number of shares.
• People who own shares in a company -
  shareholders.

3
Contd

• Private ? Publically Traded Corportation
• -Govt. application
• If approved, the company will be authorized to
  sell a set number of shares. This value is
  referred to as the authorized shares.
• The first day the shares are available for the
  public to buy these shares is referred to as the
  initial public offering or IPO for short.
• At a given time the number of shares that have
  been sold is referred to as the shares
  outstanding.

4
What is a Stock Market?

• where trading of stock is facilitated
• -buyers and sellers come together
• -orders normally carried out by a broker rather
  than the individual investor
• Commission- a fee for facilitating the
  transaction.

5
Who should I go to?

• Discount

• Full Service

• -lower fees
• -some have good tools and resources but youll
  have to make the decisions yourself
• -cheaper and provides young investors with
  learning experience by letting them make their
  own decisions
• -Example- etrade.com

• higher fees
• -more research and individual investing advice
• -harder to afford for young investors
• Example- J.P. Morgan

6
Market Capitalization

• The value of a company
• Market Capitalization can be calculated by
  multiplying the number of outstanding shares by
  the current share price
• Large cap gt5 billion
• Mid cap 1-5 billion
• Small cap 250 million- 1 billion
• Micro cap lt250 million

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Market Capitalization contd

• Historically, large caps have experienced slower
  growth with lower risk. Meanwhile small caps have
  experienced higher growth potential, but with
  higher risk.

8
Types of Orders

• Market order- a market order will fill at the
  best possible price at a given time.
• For this type of order, the buyer accepts the
  lowest possible ask price regardless of what it
  is.
• Limit order- a limit order specifies a maximum
  price per share on a buy order and minimum price
  per share on a sell order.
• While you are able to guarantee a price, you run
  the risk of your order never going through

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Types of Orders Contd

• Stop order- a stop order is one that becomes a
  market order after a certain price (once the stop
  price) is met.
• Stop limit order- this is a combination of a stop
  order and a limit order

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Dividends

• Percentage of a companys earnings paid out to
  shareholders, expressed as a dollar amount per
  share (Cash Dividend)
• Can also be in the form of equity, where
  shareholders receive more shares (Equity
  Dividend)
• Growth Stocks vs. Mature Stocks

11
Stock Splits

• Company Z has 100 shares valued at 100 each
  10,000 in total share value.
• Board of directors decides to split the stock,
  creating 200 shares valued at 50 each 10,000
  in total share value.
• Dont have to be 2-for-1 split ratio.
• Why/ why not?
• Keeps Stock affordable, encourages growth
• Expensive stocks attract only high-quality
  (rich) shareholders

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Indices

• An index is an imaginary portfolio of securities
  representing a particular market or a portion of
  it. The percentage change is more important than
  the actual numeric value.
• Main Indices
• The Standard Poor's 500 is one of the world's
  best known indexes, and is the most commonly used
  benchmark for the stock market.
• The Dow Jones Industrial Average is a
  price-weighted average of 30 significant stocks
  traded on the New York Stock Exchange and the
  Nasdaq.
• The Nasdaq is traditionally home to many
  high-tech stocks. The big ones include Microsoft,
  Intel, Dell and Cisco.
• http//finance.yahoo.com/chartschart25symbolgs
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How to read a stock table
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The Bull vs. The Bear

• Bull markets are characterized by optimism,
  investor confidence and expectations that strong
  results will continue.
• Of course, no bull market can last forever, and
  sooner or later a bear market will come.
• A bear market is a prolonged period in which
  investment prices fall, accompanied by widespread
  pessimism.
• During a bear market many investors choose to
  either short sell or take their money out of
  stock and invest into less risky alternatives
  like the fixed-income securities discussed
  earlier.

15
QA
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Julians Monthly Stock Picks...

• John Deere (DE)
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• ats.un 12
• http//finance.yahoo.com/q?sATS-UN.TO
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• http//finance.yahoo.com/chartschart5symbolats-
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• dpi.un 4.10
• http//finance.yahoo.com/q?sDPI-UN.TO
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