The Queen’s Commerce Trading Competition

1. The Queen’s Commerce Trading Competition General Meeting November 3rd 2009

2. I. Overview Prize Structure

3. Table of Contents Trading vs. Investing • Timeframe • Decision making methods • Are you a trader or an investor?

4. Table of Contents What is an ETF? • Tracking mechanism: Indices, Commodities, Bonds, Currency • Trades on an exchange • How you can use them: leverage, themes, “safer” interim/long term investments

5. Table of Contents Limit Buys and Stop orders • Limit Buys • Allows you to purchase shares at a designated price • Once stock price reaches your lower limit, order gets executed • Stop Orders • Allows you to sell shares at a designated price • Once stock price reaches your upper limit, order gets executed • Helps limit a loss or lock in profit • Especially helpful if you do not monitor your portfolio regularly

6. Introduction to Capital Markets

7. I. Overview Dow Jones Industrial Average • Founded by Charles Dow – 1986 • Business associate/statistician Edward Jones • Now Dow Jones & Company (WSJ, Barron’s etc.) • 30 largest and most widely held US public companies • Trade on NASDAQ and NYSE

8. Dow Jones Industrial Average • Recent Changes • June 8, 2009 - GM and Citigroup replaced by The Travelers Companies and Cisco Systems (third NASDAQ Company) • September 22, 2008 – AIG replaced by Kraft Foods • Calculation • Scaled average • Sum of prices / divisor • Nov. 2 divisor = 0.132319125 • Flaws • Frequently quoted • Only includes 30 companies • Higher price stocks have more weight • $1 move in smallest component has same effect as largest

9. S&P 500 • Managed by Standard and Poor’s – Division of McGraw Hill • 500 large-cap common stocks in US • Some exceptions • Components selected by a committee • Not necessary largest ex. Berkshire Hathaway (Warren Buffet’s company)

10. S&P 500 • Float Weighted – use shares available for public trading • Larger “Market Cap.” -> larger impact on index • Also uses a divisor to keep index constant with regards to financial actions • Recalculated every night after closing value is reported • Updated every 15 seconds during trading

11. S&P/TSX Composite Index • Largest TSX stocks by market cap • 70% of market cap. Of Canadian based companies on exchange • 204 companies (Sept 18) • Eligibility • Market Cap – min. 0.05% of index, 3 month average $1 • Liquidity – volume greater than 0.025% of all eligible securities • Domicile – on TSX, incorportated under Canadian laws • Companies such as Rogers, BMO, Tim Hortons

12. NYSE Euronext • NYSE Group merged with Euronext • Euronext had Market cap of $2.9 trillion – 5th largest (2006) • NYSE • First traded securities in 1792 • Address: 11 Wall Street • $10.1 trillion in combined capitalization

13. NYSE Euronext • Hybrid Market • Can route trades electronically • Can utilise brokers/traders on the floor • NYSE sells one-year licenses to trade directly on exchange

14. NASDAQ OMX • NASDAQ and multiple European Exchanges • NASQAQ: • Approximately 3800 companies listed • Electronic Stock Market • Highest per hour trading volume in the world • NASDAQComposite Index • Essentially all listings on Exchange

15. TSX • Largest Exchange in Canada – 8th in the world • TMX Group owns the exchange • Most Mining and Oil & Gas companies listed in the world (Canada has abundant natural resources) • Electronic exchange since 1997 • Only Canadian exchange to trade Senior equities

16. Other Canadian Exchanges • Montreal Exchange – derivatives • Vancouver & Alberta Exchange – Canadian Venture Exchange • Junior Equities

17. What’s going on in the market? ????????????????????????????????????????????????????????????????

18. Table of Contents Gross Domestic Product • Q3 GDP released: • 3.5% expansion • Beat economists’ consensus of 3.2% • Goldman Sachs downgraded forecast day before • Q4 2008 GDP -6.4% • China Q3 2009 GDP 8.9% • Consumer spending 2/3

19. Table of Contents Consumer Confidence • Fell below 50 point mark • Went from 53.4 to 47.7 • 2001 recession lowest 84.9 • Distinction between exogenous and endogenous events

20. Table of Contents What Market-Watchers Are Saying • NourielRoubini: • “Asset prices have risen too much, too soon, too fast” • “The mother of all carry trades” • David Rosenberg: • “Only economists see the recession as being over”

21. Financial Services Sector “The Banks never lose”

22. Table of Contents Financial Services Sector Brief Overview • Financial services sector includes such institutions as retail banks, investment banks, insurance companies etc. • Arguably the most important sector in the North American economy • Nearly half of ‘TARP’ participants in U.S. have 1) paid back money and 2) have posted multi-billion dollar profits last quarter • Canadian Banks (no Government relief) are once again 1) posting profits and 2) seeing capital appreciation • S&P TSX Capped Financials Sector Index continues to rise • Recovery is well on it’s way for this sector • Overall ‘bullish’ outlook

23. II. Who We Are Earnings Season

24. Ford Motor Co. – Income Statement

25. Ford Motor Co. – Credit Reconciliation

26. Ford Motor Co. – Cash Flow Statement

27. Apple Inc. – Income Statement

28. Apple Inc. – Cash Flow Statement

29. Apple Inc. – Balance Sheet

30. Earnings Surprises