Walk’n on Wall Street

Lesson 15

Slide 15A

What Does That Mean?

Term Definition

portfolio a collection of investments.

stock quote the price of one share of a stock.

institutional investor organizations that pool sums of money from many members to invest in securities.

mutual fund a professionally managed investment fund made up of a large pool of money received from many investors.

Slide 15B

What Does That Mean?

Term Definition

earnings per share

EPS; the approximate amount of a company’s profit allocated per single share in the company.

price-earnings ratio

P/E Ratio; the ratio of a company's current share price compared to its earnings per share.

rally a period of sustained increases in the prices of stocks or bonds usually following a period of flat or declining prices.

trend a general direction of a market or security over time.

Slide 15C

What Does That Mean?

Slide 15D

Term Definition

downgrade a negative change in the rating of a security

upgrade a positive change in the rating of a security

market cap the number of a company’s shares outstanding multiplied by the current share value.

yield the cash return on an investment, expressed as a percentage of the current market value.

net change abbreviated net chg; difference in dollars between the closing price of a security and the previous day’s closing price.

Reminder Slide 15E

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Lesson 15 Objectives

Compare an institutional and individual investor.

Interpret technical data in a stock table.

List ten fundamentals of stock valuation.

Compare the G8, G7, and G20.

Slide 15F

What does this stock table tell you about HnnH stock? What do all

those numbers, symbols, abbreviations, arrow, and

technical information mean?

Slide 15G

Slide 15H

A

B

C

D

52 W Hi/ Lo -shows volatility & trends

Stock = name of the company

Tkr = symbol -assigned by exchange

Dividend

Slide 15I

F

G

E

H

Yld -cash return expressed as % of current price

EPS –company’s earnings divided by number of shares

P/E -share price divided by EPS

Vol -number of shares traded

Slide 15J

J

K

I

L

Hi / Lo -comparison of share price from prior day

Close = final price of the day

Net chg = difference in dollars from the prior day’s close

Market cap (small, mid, large) –share price multiplied by total number of sharesoutstanding

Another method to analyze value: Fun with

Fundamentals Provide a deeper, analytical view with

such things as company reports (especially earnings reports)

Business plan, forecast and earnings reports

Management strengths and strategies

Pending products

Industry and sector growth

Slide 15K

Downgrades and Upgrades

Ratings, ratings, ratings

Common stock ratings: strong buy, buy, hold, sell, or outperform or underperform

Bonds = AAA down to D

Ratings are upgraded or downgraded depending on the company’s performance, problems, or negative events

Slide 15L

The Big PictureSlide 15M

An institutional investor is a professionally managed fund that pools and invests members’ money. Many factors go into analyzing a stock for value. Technical data is provided in a stock table. Stock tables look complicated but are actually easy to read, and are full of important information for comparing stock values. Stock fundamentals are also indicators of value. They include economic forecasts, earnings reports, annual reports, sector and industry growth outlook, management strengths and weaknesses, and a company’s pending products. The investment quality of stocks and bonds is professionally rated. To be financially literate in the 21st century you should understand basic stock valuation methods, and that stock markets are powerful engines driving the economy, as well as avenues to building personal wealth.

Ponder and Predict

One of President John F. Kennedy ‘s favorite sayings was

A rising tide lifts all boats...

Is this a metaphor for the stock market? Some people think it is. What do you think?

Slide 15N