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Companies and Stocks
Transcript of Companies and Stocks
What Is Stock?
The Stock Market is a term that encompasses the trading of stocks and bonds on what is called an exchange. The U.S. has 3 major stock exchanges--
the New York Stock Exchange (NYSE),
the American Stock Exchange,
Of the 3, the stocks at the NYSE have the strictest requirements and receive the greatest visibility, making it a desirable place to be listed
A stock is a certificate or security that signifies ownership in a company and represents a claim to a part of that companies assets and earnings.
Why Sell Stock
Companies sell stocks to raise
(money). When selling stocks, they lose some of the control of the company to
(people who own stock)
They can use the money to:
hire more employees
create new products
buy new buildings
Types of Stock
Common Stock: Shares of a company that do not guarantee a dividend (Part of a company’s profits /earnings that it pays as money to stockholders) and have more risk and volatility than preferred shares. Common stock holders have the benefit of providing shareholders with the right to vote for the board of directors as well as on issues that come before the board at the annual meeting of shareholders.
Preferred Stock: Shares of ownership of a company in which the share holder is guaranteed a dividend if one is declared and whose shares are usually not as volatile as common stock. Preferred stock holders do not have voting rights in company elections and decisions.
Hypothetically, lets say we are going to buy stock in my new company, "Tyler's Turtles" a company solely devoted to giving turtles homes across the state, and the stocks are priced at $1 a share and we buy 10 by going to a broker who finds a seller. Now that we own stocks, if the company begins to make profit then the value of our ten stocks will go up and vice-versa if it does poorly.
While buying stocks are easy, there is a lot of Risk involved. None of the money you invest is insured so if you lose it, there is no safety net. Most investors recommend that you only use supplemental money, that is, money you wont need in the next 3-5 years or else you could seriously jeopardize your financial security. Always be wary of the risk involved with a company
Seems Simple Huh?
Stocks are divided into shares.
You can own one share or thousands of shares.
Stock prices can go up or down-- this determines whether a shareholder makes or loses money
is a mnemonic used to easily identify a company which can consist of letter and numbers
The price of a stock fluctuates each day based on how many people want to buy it, which is called Demand. If a large amount of people want to buy a stock that doesn't have a lot of shares, the stock value will rise. The Supply of stock in combination with the Demand will determine a stock's value
Money is made when a person's stock raises in price or when a person sells their stock in a company when it is worth more than they paid for. For example, we check our 10 shares in "Tyler's Turtles" and the stocks are worth $2, we have made $10 because the value of the stock has doubled since we bought it initially for $10. We now can keep the stocks and hope that their value continues to rise, or we can sell them
How Do I Make Money?
The Power of Time
Time is the greatest variable in investing and can make or break an investment. All markets have ups and downs but the longer an investor sticks with the market, the better chances their investments will prosper. The most reliable stocks don't jump in value each day, but gradually increase by little incriments
How much money would you make if you'd bought 100 shares of Google in 2004 and decided to sell ?
Some of the most successful investors spread their investments around to multiple types of investments in order to ensure profitability. While investing a large amount in a single company can have great rewards, there can also be catastrophic loss if the company fails. Spreading out investments helps to minimize the risk of investing and maximize the chance of profits
Power in Diversity
: Someone who risks funds by purchasing financial products with the hope the investments will increase in value over time.
: Initial Public Offering; the initial sale of stock to the public by investment bankers.
: An announcement appearing in financial publications such as The Wall Street Journal announcing a company’s Initial Public Offering (IPO.)
: Indicates how much and how quickly the value of an investment, market, or market sector changes.
Brands and Companies
Company: A business or association usually formed to manufacture or supply products or services for profit.
Corporation: A business that is owned by stockholders and has right and responsibilities as if it were a person.
Entrepreneur: A person who organizes, operates, and assumes the risk for a business venture.
Risk: The chance that an investment's actual return will be different than expected. Possibility of losing all or some of one’s investment
Types of Business
Types of Business
: A corporation that doesn’t sell shares to the public. You cannot buy shares of a private company in the stock market.
: The stock of a public company is owned and traded by individuals and institutional investors. In contrast, the stock is held by company founders, employees, and sometimes venture capitalists.
A company owned and run by one individual who receives its profits or bears its losses. A proprietorship is not separate from its owner, who is liable for the company debts
: A company owned and managed by two or more people who share its profits or losses. A partnership is not separate from its owners, who are liable for the company’s debts.