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Money Management & Stocks. Meeting #2: 13 September 2005. Agenda. Re-Statement of Club’s Mission Why Investing is Important Basic Money Management How to Analyze Stocks Guests: Mr. Kirby & Mr. Prokop Sector Sign-Ups. Investment Club’s Mission:.
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Money Management & Stocks Meeting #2: 13 September 2005
Agenda • Re-Statement of Club’s Mission • Why Investing is Important • Basic Money Management • How to Analyze Stocks • Guests: Mr. Kirby & Mr. Prokop • Sector Sign-Ups
Investment Club’s Mission: 1. Educate Cadets regarding Investing and personal financial planning 2. Maximize returns on the Spragins Fund
BLUF of Money Management: • Start saving your money early • Make wise financial decisions • Have a Budget • Know the Tax Code (website) • Help your Soldiers
A quick Cow Loan example • Maxing out your Roth IRA with only your Cow Loan • Earn 10% compounded annually • Equals $1,770,316.88 @ 65 • Or $2,851,113.04 @ 70
A more Lucrative example • Maxing out your Roth IRA till age 65 (marry at 26) • Earn 10% compounded annually • Equals $6,104,684.41 @ 65 • Start withdrawing $600,000 per year @ 66 • You’ll have $8,941,887.22 @ 100 still in your account earning interest
“What is ze most powerful force in the universe?” Compounding Interest Rates Compound Interest!
Buying a Car • I can buy a $30k Jaguar or stick with my Honda • Perform a Cost/Benefit Analysis • The Jag actually costs me $70k • Is a new Jag going to give me $70k worth more of personal joy than my Honda? No. Go with the Honda.
Create a Budget • Extremely important after Graduation • You’ll be tracking more than a dozen monthly expenses • Form good habits now • Some of you will be amazed at where all your money goes • A budget Now will create good spending habits
Helping your Soldiers w/ their $$$ • AVOID Payday Lenders (see link) • Cause a “debt trap” • You’re the first line of defense • Educate yourself • More Importantly, know who to refer them to before a problem • All Posts have rarely used but high quality people who can help • Show them these slides (bonuses)
What is a Stock? • A Stock (Certificate) represents a small slice of a company that can be bought and sold. • Companies “go public” to raise money; they will never again get money from investors after the IPO (Initial Public Offering). • P/E Ratio and Market Capitalization • Investors hope their company increases its earnings and either reinvests them in the company to increase future earnings or pays them a dividend.
Growth Investing • Find the next MSFT or WMT • Look for continuing earnings growth • They have higher “trailing P/Es” • But lower “forward P/Es”
Value Investing • Find a MSFT or WMT that is currently trading at a discount • Make sure of sound fundamentals • Contrarian Investing
Next Time • How to start investing (or make better investment decisions) • Setting up an IRA • Analyzing Mutual Funds • Risk Tolerance and Goals • Diversification and Asset Allocation
Guest Speakers Questor Management Company • Mr. Kevin Prokop • Director • Mr. Dennis Kirby • Vice-President of Private Equity
Sector Sign-upsPrepare to Work! (min of 4-5 hours) • Technology • Giles Evans E-3 • Energy • James McCray C-3 • Consumer Goods • David Marold B-1 • Healthcare • Bryan Spencer A-4 • Financials • John Howie H-1
Screening Criteria • 1. Minimum Price per Share $5 (has to do with listing requirements and whether or not institutional money can invest in stock) • 2. Price to Sales maximum 5 • 3. Inside Ownership Minimum 1% (management has some stake in the company) • 4. Institutional Ownership Minimum 15% (does smart money invest in this company) • 5. Price to Earnings maximum 50 (although we prefer something more reasonable compared to sector averages you'll see on Quicken) • 6. Price/Earnings to Growth (PEG) < 1.0 (is the market pricing the stock to fully reflect the stock's EPS growth?) • 7. EPS minimum of $0.01 (this eliminates companies losing money) • 8. Total Revenue minimum $50 million (so it is not a mom and pop store)
