Papa John’s Pizza

1. Papa John’s Pizza • In 1984, "Papa" John Schnatter knocked out a broom closet located in the back of his father's tavern (Mick's Lounge), sold his prized 1972 Z28 Camaro in order to purchase $1,600 worth of used restaurant equipment, and began selling his pizzas to the tavern's customers.

2. Investment Bankers • Long term financial planning • Marketing of security issues • Arrangement of private loans • Negotiation of mergers

3. Rights of Shareholders • Receive a stock certificate • Share in profits • Voice in management (vote for Board Dir) • Receive financial information • Sell stock at anytime

4. Common vs. Preferred Stock • Preferred has preference in claims to assets and dividends – must be paid before common. • Preferred dividends – fixed • Common dividends – fluctuate • Preferred usually have no voting rights

5. Initial Public Offering (IPO) • First time company offers stock to the public for cash. • Can only have one. • Also known as going public

7. Tombstone Ad – for new issues

8. Prospectus • Character of the business • Bios on the officers • Financial Statements • Reasons for raisingfunds

9. SEC – Securities and Exchange Commission • Government agency charged with enforcement of the nation’s securities laws and regulations. • Police of the investment community • Monitor insider trading • Prevent fraud

12. How to read stock quotes • Yahoo Finance

13. Stock Exchanges and Markets • NYSE – over 2,800 stocks • AMEX – over 700 stocks • NASDAQ – over 3,200 stocks • OvertheCounter (OTC) – over 4,000 stocks

14. Markets can look chaotic • View of JFK airport

15. Specialist on the NYSE

16. Busy Specialist on NYSE

17. Commodities Trader

18. NASDAQ in New York City

19. Types of orders • Market order – buy or sell ASAP at the going or market price. • Limit order – buy or sell at a specific price and time limit. • Good till canceled • Good for the day

20. Dow Jones Industrial Average • Developed by Charles Dow in late 1800’s • 30 stocks • No longer a pure average due mainly to stock splits

21. Dow Jones Industrial Stocks

22. Dow Jones since 1928

23. Stock Split Example

24. What stock has the highest price?

25. Berkshire Hathaway Is it expensive?Should it split the stock?

26. Warren Buffett’s view on splits Buffett believes that splitting the stock will attract shareholders who are more focused on the stock price than the business results at Berkshire. These types of shareholders, according to Buffett, tend to make emotional or irrational decisions about buying/selling the stock; hence leading to wild fluctuations in the stock price producing what Buffett refers to as “manic-depressive valuations.”

27. Stock Classifications • Blue chip • Growth Stocks • High P/E ratio • Pay little or no dividend – reinvest their profits • Income stocks • Low P/E ratio • Pay dividends regularly • Cyclical stocks • Highly dependent on the economy • Airlines and hotels are typical examples

28. Company Sizes • Large-Cap • Mid-Cap • Small-Cap Cap = Market Capitalization = stock price X # shares outstanding Which is generally the safest investment? Which generally has the greatest growth potential? Which company has the largest market cap?

29. Making money with stocks • Capital gain – the profit made on the sale of the stock. • Dividends – portion of the company’s profit paid out to its shareholders. • Dividend yield = dividend/stock price or expected dividend over next year/stock price

30. Stock Brokers • A broker, originally, was a wine seller who “broke open” wine casks.

31. Types of Brokers • Full-service • Merrill Lynch – commissions vary widely • Discount • Ameritrade - $11 trades • Deep Discount • Scottrade - $7 trades

32. Market Indexes • Dow Jones Industrial Average – 30 stocks • NASDAQ – 100 stocks • S&P 500 – 500 stocks

33. Historical Returns of the Market

34. Bull vs. Bear Market

36. What is a Mutual Fund? • A collection of stocks, bonds, and other securities. • Owned by a group of investors. • Managed by a professional investment company.

37. Reasons to invest in a Mutual Fund • Broad diversification • Professional management • Investment objective • Affordability • Ease

38. Types of Mutual Funds • Growth • Income • Money Market • Index • Specialized

39. Mutual Fund Performance • From 1985 – 2000, 85% of U.S. actively managed mutual funds underperformed the S&P 500 index. • Typically 75% underperform

40. Other Mutual Fund Items • Load (44%) vs No-Load (56%) • Average load – 4.75% • Average annual expense – 1.1% • Over 9,000 mutual funds

41. Invest $10,000 in… High-expense stock fund (1.5%) Low-expense stock fund (.2%) Value in 20 years $34,451 $44,780 How the Stingy Get Rich Payoff for cutting costs: $10,329

42. “Simple solutions like indexing can feel unsatisfying. You want investing to be complex, so you can feel special when you figure it out.” Jason Zweig – Your Money and Your Brain

43. Performance over time

44. Roth IRA – Individual Ret. Acct. • $5,000/yr contributions • Distributions are not taxable • Contributions can be made as long as you live

45. 401k Plans • A 401(k) is a type of retirementplan that allows employees to save and invest for their own retirement. • Through a 401(k), you can authorize your employer to deduct a certain amount of money from your paycheck before taxes are calculated, and invest it in the 401(k) plan.

46. Why a 401k is a good idea See Fidelity’s website

47. What affects your credit score? • Your payment performance history (35%) • Your current level of indebtedness (30%) • The age of your credit history (15%) • Your pursuit of new credit (10%) • The type of accounts in your credit report (10%)

49. FICO score and mortgage payment $216,000 mortgage for 30 years

50. Free Credit Report • You are allowed to check your credit once a year for free. • Your credit score (FICO) is available for a small fee. • Go to www.annualcreditreport.com