13.1 Investing Strategies.

1. 13.1 Investing Strategies. • Saving : short term goals: • examples:? • Investing: long term goals • Examples? • http://video.cnbc.com/gallery/?video=828664867

2. How do you know you are ready to invest?

3. When are you ready to invest? • Have a well-planned budget • Emergency savings • Credit card debt under control.

4. People invest in many ways: • What to consider before investing: • Types of RETURNS- • Paid at regular times? • Sell for profit? • Tax advantages?

5. Do you want LIQUIDITY in your investments? • Which is more liquid?

6. Consider how much VOLATILTY you can handle.

7. EVERY INVESTMENT INVOLVES RISK: • Conservative risk--- lower returns. • Greater risk for potential for bigger returns… • Risk LIQUIDITY-not being able to sell at higher price? • RISK INFLATION- increases faster than your investment value.

8. What are your objectives? *Purpose for the money? *How much can you afford to invest? $$$ *What’s your timeline? less time= more conservative more time= more agressive

9. 3 Strategies: • 1) Generate INCOME. • 2) Growth: likely to grow in value with time. • 3) Tax Reduction: Reduce amount of taxes owed to government.

10. Diversify: Use a variety to reduce risk.

11. Investing in the Stock Market • For Long Term goals. • Higher Risk for potential higher Return.

12. 13.3 Stock Market Basics • If a company needs money, instead of borrowing from a bank, they may raise money by selling SHARES of STOCK. (units of ownership) • A person that buys Shares is a SHAREHOLDER or partial owner of company.

13. When Ashton joined 2.5 men- There was a major issue,What was all the talk about?

14. PUBLIC VS PRIVATE • Public companies: can buy stock in them. • Ex: American Eagle, Walmart, Microsoft, Apple, YUM, McDonalds. • PRIVATE companies: owned by privately held companies. Can not buy share of stock. • Ex: M&M Mars, Menards, Hallmark,Subway • http://www.forbes.com/lists/2011/21/private-companies-11_land.html

15. When a private company goes “public” • IPO- Initial public offering. Way for company to raise money. Investors buy shares directly from the company. • Twitter went public Nov 15th on NYSE • http://www.forbes.com/sites/briansolomon/2014/03/24/is-your-takeout-worth-1-7-billion-grubhubs-ipo-thinks-so/ http://money.cnn.com/gallery/pf/2012/12/26/best-worst-ipos.fortune/2.html

16. U.S. Stock Exchanges:where stocks are traded. • NYSE- Wall Street, Manhattan, NY regular trading hours are 9:30 a.m. to 4 p.m. Eastern time • AMEX: New York City, New York • NASDAQ: Largest network of exchanges Electronically traded. • Trading Sessions (Eastern Time)Pre-Market Trading Hours from 4:00 a.m. to 9:30 a.m.Market Hours from 9:30 a.m. to 4:00 p.m. After-Market Hours from 4:00 p.m. to 8:00 p.m.All markets are closed on holidays, Saturday and Sunday. • What other times did the markets close???

17. Why is the Stock Market considered RISKY? • Do you expect to have money invested in stocks in your lifetime? • Do you already have $ in stocks?

18. Calculated Guess???If I had bought shares of Microsoft in college…how much would I have today?

19. It's Thursday, March 13, 1986: • Microsoft, founded more than a decade earlier and already a powerhouse in the world of personal computer software, executes an IPO- initial public stock offering that will raise $61 million for the company and leave 30-year-old co-founder Bill Gates unfathomably wealthy.

20. $2100 investment… • 100 shares at the $21 ea. offering price that day and sat on the investment for 25 years, it would have mushroomed into 28,800 shares over the course of nine stock splits and be worth about three quarters of a million dollars today. • That's the good news. Here's the disheartening caveat: Had you instead sold your stash on Dec. 1, 1999, when Microsoft's stock price reached its peak, you would have reaped $2100 investment = $1.4 million. • http://finance.yahoo.com/echarts?s=MSFT+Interactive#chart2:symbol=msft;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

21. History of MSFT stock(ticker symbol)

22. STOCK SPLITS: 1 share splits into 2 shares. (Shown by black triangles) Price of share is now half. More affordable.

23. “The Dow was up today…”The Dow was down today.. What does that mean?

24. The DJIA consists of 30 major American companies: Ex: Coca Cola, Home Depot, AT&T, McD, MSFT,VZ, WMT, DIS. http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average It is an index that shows how 30 large publicly owned companies based in the United States have traded during a standard trading session in the stock market. *created in 1896, Named after Charles Dow and Edward Jones.

25. Investing in the Stock Market Dow Jones Industrial Average 120 years averages. Stock market

26. DJIA are Blue Chip Stocks • large, financially sound company that has proved it can weather downturns in the market. • 3M Company; American Express; • AT&T; Bank of America; • Boeing Co.; Caterpillar Inc.; • Chevron Corp.; Cisco Systems Inc.; • Coca-Cola Co.; Du Pont; Exxon Mobil Corp.; • General Electric Co.; Hewlett-Packard Co.; • Home Depot Inc.; IBM; Intel Corp.; • Johnson & Johnson; JP Morgan Chase & Co.; • Kraft Foods Inc.; McDonald's Corp.; • Merck & Co.; Microsoft Corp.; Pfizer Inc.; • Proctor & Gamble Co.; Travelers Cos.; • United Technologies Corp.; Verizon Communications Inc.; • Wal-Mart Stores Inc.; Walt Disney Co. • Also in DOW JONES INDUSTRIAL AVG. • $$$ more expensive shares. Less risk.

27. Bull Market: trend of rising market prices.

28. Bear Market: trend of falling prices.

29. SEC: Security and Exchange Commission • Protects investors by: • Requiring companies to disclose honest accurate information about financial health. • Oversees activities of stock exchange and anyone else involved in buying /selling stocks.

30. First Chairman of SEC: • Started in 1934- After the crash of ’29. • FDR appointed • This man to head the SEC. • Very controversial move. Why???

31. Joe Kennedy: • Kennedy had thrived on Wall Street. Made millions in ways that are now considered Illegal. • Created a scandal. Many people did not trust him. • FDR said- “It takes a thief to catch a thief.”

32. INSIDER TRADING • “INSIDER TRADING”- illegal. • profitable trading in securities that is done using access to privileged (private) information.

33. Think about companies that you help support… • What is their ticker symbol? • Is the company Privately held? • Or PUBLIC?

34. So what if…. • you decided to never invest in the markets after experiencing the Crash of 1929?

35. Expect RISK… • Let’s look at history of stock market….

36. What makes prices go up or down? • Price of shares is determined by demand. • Lots of people selling shares- price goes down. • Lots of people wanting to buy- share price goes up.

37. What was life like in the 1920’s? • Unemployment 5.2% • Life expectancy: Male 53.6 Female 54.6 • 343.000 in military (down from 1,172,601 in 1919) • Average annual earnings $1236; Teacher's salary $970 • More educated-Illiteracy rate reached a new low of 6% of the population. More people went to college. * women could vote. * prohibition increased crime/gangster activity.

38. Prohibition • restriction of the production, sale, transportation, importation, and exportation of alcoholic beverages, • Having an Income Tax established created enough revenue that it made Prohibition possible.

39. Prohibition • Eighteenth Amendment to the Constitutionﾊwent into effect on January 16, 1920. • Social experiment that just didn’t work.

40. So why did the market CRASH? • Many people helped businesses grow by purchasing stocks 1920’s . • hopeful of becoming rich…many bought shares on credit. • While investors wealth was growing, workers wages were not and economy became unbalanced. • Business growth slowed, stocks started to fall.

41. September ‘29 • Investors began to realize that prices of stocks were becoming very inflated. • Stock values began to decline.

42. Black Tuesday • Most people that invested in stocks panicked and began selling shares. • When everyone sells at once, price plummets • Crowds outside wall street waiting for news.

43. Effects of the crash: • Banks closed without warning • Fortunes were wiped out. • Some investors killed themselves. • Millions of people from all over the world who owned stocks waited helplessly as stock values crashed.

44. Hoovervilles • Many families lost their homes because they could not pay their mortgages. • These people had no choice but to seek alternative forms of shelter. • Hoovervilles, named after President Hoover, who was blamed for the problems that led to the depression, sprung up throughout the United States.

45. Farm foreclosures after crash • Families were often thrown off their farms and lost everything. • Penny auctions occurred as backlash.

46. Meanwhile, in Europe…. A former house painter and decorator started using the poor economy to influence people and getting people to rally behind him…

47. Hitler’s became successful- • won over the bulk of the German middle-class, • hard hit by the inflation of the 1920s • unemployment of the Depression. • Farmers and war veterans were other groups who supported the Nazis. • Who did he blame for the poor economy?

48. The Great Depression

49. Al Capone’s Soup kitchen • As 1930 major publicity campaign. • He opened a free soup kitchen for the people who had been thrown out of work by the deepening Depression. • "The soup kitchen was carefully calculated to rehabilitate his image and to ingratiate himself with the workingman.

50. Elected FDR in 1932 • Promised to deliver “New Deal” for Americans. • Repealed Prohibition because revenue from income taxes had decreased sharply. • Put Americans back to work with several programs.