A quick introduction to investing
by CEO Sarah Deming
September 8, 2009
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Why do the rich stay rich? Why can people
retire before being eligible for social security?
In the long-run, the Dow (DJIA) has
significantly out performed the risk-free
investment (the t-bill)
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Equities/Common Stock
 Core vs. Growth
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Fixed Income
 Definition
 Different Ways to Invest
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Alternative Investments
 Options, Real Estate, Hedge Funds, ect.
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The WIC portfolio is made up largely of Core
(60%) and Growth (25%) Equities
WIC Target Portfolio
Cash
3%
Growth
25%
Fixed Income
12%
Core
60%
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“Big and boring is the key to core
investments”
Stable, large, blue-chip companies
Large Market Capitalization (<10 Billion)
Consistent, large ROE (return on equity)
Steady Rate of Growth
Dividends
Examples in our portfolio:
 Boeing, General Electric, Proctor & Gamble
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“Glamour Stock”
Shares in a company whose earnings are
expected to grow at an above-average rate
relative to the market
More risky, greater chance of a higher return
Commonly Technology Companies
No Dividends
Examples:
 Hansen, Amgen, Applied Materials, Nintendo
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Dow Jones Industrial Average
 “When the market is up today”
 Price-weighted average of 30 large, significant
stocks
 Most watched index
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Standard & Poor’s 500
 Leading indicator of U.S. equities
 Reflects the risk/return characteristics of the large
cap universe
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A type of investment that yields a regular
(fixed) return—primarily, bonds.
Bonds are debt (stocks are equity)
Bonds are used to diversify portfolios
Issuers of bonds are generally corporations
and governments
Government bonds are the safest
investments and are used as “risk-free”
instruments
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Bond funds is a common way to invest in
fixed income. Bond funds are primarily
invested in a variety of bonds and other debt
instruments with a specific focus.
 Examples of bond funds WIC holds are Vanguard
Total Market Fund and PIMCO Low Duration.
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Corporate Bonds
Municipal Bonds (tax advantages)
U.S. Treasury Bills
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Often require large amount of investment
Risky but have a high return
Limited Regulations, complex, low liquidity
Examples Include:
 Private Equity
 Real Estate
 Infrastructure
 Commodities
 Hedge Funds
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Financial ratios are a good quick way of
understanding a company’s basic finances
without examining the Income Statement,
Balance Sheet, and Cash Flow Statements.
Profitability:
 Return on Assets (ROA)
 Return on Equities (ROE)
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Debt:
 Debt Ratio
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Valuation Ratios:
 Price to Book
 Price/Earnings (P/E)
 Dividend Yield
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Since there are no investing classes at
Whitman, the best way to learn about
investing is to educate yourself (and come to
WIC meetings)
Resources:
 Investopedia
 Wall Street Journal
 Yahoo and Google Finance
 Morningstar