MARKETS
COMPANIES
INDEXES
OBJECTIVES
FUNDAMENTALS
INVESTMENT MARKETS
EXCHANGE
Auction Market – ‘Open Outcry’
Physical Location – Floor Traders – 18 Trading Posts
New York Stock Exchange – NYSE – ‘The Big Board’
American Stock Exchange – AMEX
Tokyo Stock Exchange
London Stock Exchange
OVER-THE-COUNTER
Any securities trade not handled on an exchange
The largest securities market
Computer communications network – Links securities dealers
Negotiated market – Broker dealers and ‘market makers’
Most all initial public offerings completed ‘over the counter’
NASDAQ – National Association of Securities Dealers
Automated Quotations
Three levels of reporting and tracking trades
INVESTOR
-Commission
-No Load
Components
of Return
Dividends
Interest
Cap Gains (losses)
Realized
Unrealized
$$$
Mutual Fund
Shares
Reinvested
INDEX FUND
MUTUAL
FUNDINC
INC
(Investment Company)
Dividends
Capital Gain Income
Dividend Income
Stock
Expenses
Management Fee
- IBM
- Microsoft
Custodial Fee
- Enron
- AT&T
- Fly by Night Inc.
- Chevron
MARKET INDEXES
Performance benchmarks
Dow Jones Industrial Average - DJIA invented by Charles Dow back in 1896.
30 significant stocks traded on the New York Stock Exchange and the Nasdaq
Standard & Poor's 500 Index - S&P 500
An index of 500 stocks
Tracks the overall performance of
Russell 1000 Index
the American stock markets
Russell 2000 Index
Russell 3000 Value Index
Wilshire 5000 Total Market Index - TMWX
6,700 publicly-traded companies
Dow Jones Utility Average - DJUA
15 utility stocks
Dow Jones Transportation Average - DJTA
20 transportation stocks
Tribune/Bloomberg Index
Utah’s 32 largest publicly held companies
Tracks the performance of smaller
segments of the stock markets
INVESTOR
-Commission
-No Load
Components
of Return
Dividends
Interest
Cap Gains (losses)
Realized
Unrealized
$$$
Mutual Fund
Shares
Reinvested
INDEX FUND
MUTUAL
FUNDINC
INC
(Investment Company)
Dividends
Dividend Income
Capital Gain Income
Stock
Expenses
Management Fee
- IBM
- Microsoft
Custodial Fee
- Enron
72% of Index Funds
- AT&T
Outperform their Mutual
- Fly by Night Inc.
Fund Equivalent
- Chevron
Investment Objectives
Different types of investments whose performance reflects the
investors’ goals based on their time horizon, risk tolerance and personal wishes
Government Bond Funds
Municipal Bond Funds
Sector Funds (Health Care)
Emerging Markets Funds
International Funds
Real Estate Funds
Commodity Funds
Large Cap Growth Funds
Capitalization
Shares Outstanding (x) Market Price per share
314,870,600
x $ 358.04 = $28,180,918,700 = $28B
Large Cap = $10 B – $200 B
Mid Cap
= $2 B – $10 B
Small Cap = $300 M – $2 B
Value Blend Growth
Stocks of Companies that
have a low P/E ratio relative
to their peers
Stocks whose revenues
and /or earnings are or will
be growing faster than
their peers
Price/Earnings (PE) Ratio?
Current Price per Share
Earnings per Share
= Price/Earnings Ratio
Price Earnings Ratio
Risk
Price Earnings Ratio
Risk
FIVE INVESTMENT
FUNDAMENTALS
DIVERSIFICATION
ALLOCATION
HISTORICAL PRICING MODELS
MANAGING THE MANAGERS
INVEST MORE MONEY!
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9
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20
21
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23
24
25
ExxonMobil
Johnson & Johnson
Procter & Gamble
AT&T
Chevron
Microsoft
IBM
General Electric
Wal Mart
Pfizer
Cisco Systems
JPMorgan Chase
Apple
Abbott Labs
Hewlett Packard
Google
Verizon Communications
Coca-Cola
Intel
PepsiCo
Philip Morris International
Wells Fargo
Oracle
ConocoPhillips
McDonalds
76.1
56.7
51.5
24.6
71.1
18.8
93.3
11.6
47.7
14.1
16.1
24.6
97.8
55.8
35.2
359
30
40.7
14.1
49.5
36
16.4
17.6
46.1
57.3
$ 387,297.46
157,401.25
153,614.53
144,732.08
144,500.95
143,823.62
125,304.33
122,048.13
106,694.99
94,873.10
93,974.14
91,890.64
86,964.52
86,562.77
86,232.94
85,760.30
85,214.53
80,919.37
78,312.96
76,926.06
72,910.14
68,996.72
68,867.68
68,741.60
63,841.13