1. DRAW A LINE SEPARATING TODAY & YESTERDAY 1) Write: Date: 03/02/11 , Topic: Making Money! 2) Next line, write “ Opener #27 ” and then: 1) Write down your % change for your stocks, and the % change for the Dow, S&P, and NASDAQ 2) Write 1 high + 1 low in last 24 hours 3) Rate your understanding of yesterday: lost < 1-5 > too easy (3 is perfect) 4) Respond to the Opening Clip by writing at least 1 sentences Announcements: None
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3. Agenda 1) Mutual Funds and ETFs 2) Investment Presentation End Goal, you will be able to… 1) What can I do other than stocks? Reminder 1) Finalize your virtual stock orders 2) Extra Points: Bring Laptops Tomorrow
5. Review: Stock Data : Last Trade : Market price for a share Open Trade : Price it opened in morning Daily Range : Today’s high/low range 52 Week Range : Last 12 mo. high/low range a) Market Cap : Stock price X number of shares circulating. Sign of how big the comp is b) Volume : Number of shares sold that day c) Beta : How likely does it swing up/down, 1 is market average, over 1 is more volatile
6. d) EPS (Earnings Per Share): Net Income ÷ Shares Circulating ( Higher is better , more earnings per share: how much earnings per each share of stock, not all earning always given back to shareholders, sometimes re-invested ) e) PE (Price Earnings Ratio ): Stock Price ÷ EPS ( Lower better , more bang for your buck: how much you are paying for $1 of comp’s current annual earnings, ROI point, if biz grow fast, ROI can be faster ).
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9. Journ #25a , Title “ Stock Practice ” Use a calculator, and work with a partner. 1) a) Mattel has 393 million shares circulating, the price of the stock is $13, what is its market cap? b) Mattel made $560 million in income and has 393 million shares, what is its EPS? c) Using the stock price of $13, and EPS above, what is the PE ratio?
10. Journ #25a , Title “ Stock Practice ” Use a calculator, and Journ with a partner. 2) Read the Doc A (stop at “Better measure”) , first explain what is PEG and based on what you read, is GOOG is a good buy ? Yahoo: Stock Price: 16.37 Div: 0 EPS: 0.90 P/E: 18.19 3) Compared to YHOO, is GOOG a good buy?
11. Notes #25a , Title: “ Mutual Funds ” 1) Mutual Funds : A pool of money invested by a professional in a group of stocks ( picked through a specific strategy: lo/hi risk, etc ). a) Net Asset Value (NAV): Price based on the (stock prices) of the pooled investment divided by the number fund shares. Managers of the fund take a fee/commission. Like stocks, you money when you sell the mutual fund or are paid dividends.
15. Journ #25b , Title “ Create a Mutual Fund ” 1) Your team has been hired to manage a new mutual fund to invest in companies that serve the youth market. Come up with a mutual fund name: _______ Youth Market Mutual Fund 2) Come up with a list of promising companies that serve the youth market. Be prepared to present.
16. Notes #25b , Title: “ Mutual Funds ” 2) Index : List of stocks that help gauge the stock performance of the stock market ( thermometer ) a) Dow (7,992): Index of 30 largest, most traded stocks public companies. b) Nasdaq (1,547): Index of 4000 stocks traded on NASDAQ, typically newer public companies, many tech. c) S&P 500 (840): Index of 500 largest, most traded stocks public companies.
17. 3M Co. (MMM) Alcoa, Inc. (AA) American Express Companies (AXP) AT&T Inc. (T) Bank of America Corp. (BAC) Boeing Co. (BA) Caterpillar Inc. (CAT) Chevron Corp. (CVX) Cisco Systems Inc. (CSCO) Citigroup Inc. (C) - dropped 6/1/09 Coca-Cola Company (KO) DuPont (DD) Exxon Mobil Corp. (XOM) General Electric Company (GE) General Motors Corporation (GM) - dropped 6/1/09
18. Hewlett-Packard Co. (HPQ) Home Depot, Inc. (HD) Intel Corporation (INTC) International Business Machines (IBM) Johnson & Johnson (JNJ) JPMorgan & Chase & Co. (JPM) Kraft Foods Inc. (KFT) McDonald's Corporation (MCD) Merck & Co., Inc. (MRK) Microsoft Corporation (MSFT) Pfizer Inc. (PFE) Procter & Gamble Company (PG) Travelers Companies Inc. (TRV) United Technologies Corporation (UTX) Verizon Communications (VZ) Wal-Mart Stores, Inc. (WMT) Walt Disney Co. (DIS)
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21. Notes #26a , Title: “ Mutual Funds ” 1) Index Fund : A fund where the manager buys the stocks on a preset list like the S&P 500 (cheaper since less research/skill involved) 2) Exchange Traded Fund (ETF) : Like index fund, cheaper cause it’s automated (acts like stocks, no active management: which means dividends not re-invested) Many economist argue that it’s safer to buy a fund that spreads nearly the whole market like an index fund or ETF b/c it’s difficult to beat the market trend, this is called “efficient market theory.”
23. Warren Buffett reiterated his view that for most small investors who don't have time to research individual companies, cheap index funds are the best way to invest in the stock market. "The best way in my view is to just buy a low-cost index fund and keep buying it regularly over time , because you'll be buying into a wonderful industry, which in effect is all of American industry. If you buy it over time, you won't buy at the bottom, but you won't buy it all at the top either," the billionaire investor said. In contrast to mutual funds run by portfolio managers actively picking stocks, "If you have 2% a year of your funds being eaten up by fees you're going to have a hard time matching an index fund in my view," Buffett said. " People ought to sit back and relax and keep accumulating over time ."
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27. Journ #26b , Title “ Getting Rich ” Read the article then answer: First Page 1) According to the article, what did Diedre do to make so much so fast? 2) How much do you have to invest at 25 to be a millionaire by retirement? Second Page 3) Pick one of the mentioned mutual funds (index funds) that you like 5 Reading/Film Qs Come From These Work Sections
28. Notes #26b , Title: “ Mutual Funds ” Review: CDs, Bonds, Stocks, Mutual Funds 3) Other Investments : a) Metals (Gold), Commodities (Oil), Currencies: value based on suppy/demand b) Pensions (guarantee benefits) or 401k (benefits based on value of portfolio) c) Life Insurance: can close policy + cash out % d) Private Businesses (Angel): becoming partner more next month e) Property (live/rent): more tomorrow f) Your education/job training Lottery is not a form of retirement!
29. Notes #26b , Title: “ Mutual Funds ” 4) Final Investment Tips : a) Pay down debt before investing (unless investing % is worth more than debt %) b) Have a cash (checking act) emergency fund c) Buy insurance (auto, health, renters) d) Need money sooner (safer), longers (riskier) e) Diversify, never have all your investments in one company or industry
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33. Journ #27a , Title “ Diversify ” 1) Read the article, and pick a stock you are most interested in buying, explain why. 2) Sharing the group computer, log-in, look up, and pick some more stocks for your account (you can buy and sell whenever you want) Use http://tinyurl.com/chiangecon1 http://tinyurl.com/chiangecon2 Then write down your buys.
34. 3) Write down your role: 1-Leader, 2-Comp Researcher, 3-Notebook Analyst, 4-Presenter Develop a investment plan for Mr. Chiang’s $70,000. - Stocks you pick, explain why its good, use the financial language and data we’ve been learning in your explanation - Mutual fund you pick, explain the funds philosophy Be ready to present (2 min/10 pts), make sure everyone has something to say, other than the laptop researchers. You must also have Google Docs slides: key data w a tinyurl link to make easy to find.
36. Homework: 1) No homework. For 4 extra particapation points, bring a laptop tomorrow (Tuesday) Workbook Check: If your name is called, drop off your workbook with Mr. Chiang ( if requested, points lost if your workbook is not turned in )
