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1 Video

2 INTRODUCTION TO STOCK MARKET

3 What is the stock market? Stock market = is where a corporation can selloff pieces of itself (each piece is called a Stock) to individuals or other companies. The value of this stock is how the stock holder make money. Note that not all companies can be invested in. Only publicly traded companies (usually Inc. Corp) can release stocks. Partnership and other similar types cannot.

4 Different Financial Instruments Common stock Preferred stock T-bill Coupon bond Secured bond Equity vs. Debt

5 Major Canadian Exchanges Toronto Stock Exchange (TSX) The Montreal Exchange The Winnipeg commodity exchange Vancouver Stock Exchange Alberta Stock Exchange

6 Toronto Stock Exchange Known as TSX Mostly deals with the trading of stocks Largest exchange in Canada 3 rd larges in North America and 8 th largest in the world. More oil and gas companies listed on the TSX than any other exchange in the world.

7 Major USA Exchanges New York Stock Exchange NASDAQ

8 New York Stock Exchange Known as NYSE Billion capital is listed on the exchange Approximately 153 billion average daily trading value

9 NASDAQ World largest electronic stock market Largest IT industry exchange 3,600 companies listed on the exchange

10 Symbols Also know as ticker Many times, company name can be very long, and it can be of inconvenience to people involved in the market. So, when a company enlists into an exchange they choose a symbol, which is a unique identifier for them and usually is build off the letter of their name. For example Microsoft is MSFT. Apple is AAPL

11 Stock Market Index Is a pre-packaged portfolio of stocks or other securities. Index are often used to measure a section of the market and it s performance. Financial firm use the index as a benchmark to evaluate the success or failure of their portfolios

12 Popular Index Dow Jones Industrial Average S&P 500 NASDAQ Composite NYSE Composite TSX Composite

13 Dow Jones Industrial Average Created by the Wall Street Journal editor Charles Dow Started off with a dozen stocks in the 19 th century. Only one is still listed today GM. Other companies have been renamed, purchased or disappeared. Today it consists of 30 big name companies (blue chip stocks), including Microsoft, American Express Home Depot, McDonalds, Wal-Mart

14 S&P 500 S&P = standard and poor s Owned by McGraw Hill Lists the top 500 companies on the NYSE and NASDAQ

15 Insider Information/Insider Trading Insider information is information that has not been released to the general public and is know only by people working at the company or involved in special deal with the company. It is illegal to use insider information to buy/sell stocks. Why? Martha Steward used information from her broker to save money and spend 6 months in prison and 6 months under house arrest.

16 Price Per Share Stock on the market are quoted at price per share Price per share is the amount of money you will pay to buy a share of stock in a company For example, if a share of stock costs $52.19 and an investor buy 50 shares X 50 = $2, total investment

17 Different Investing Strategies Technical Analysis- analyzing the price of the stock and trying to predict future trends. Fundamental analysis involves analyzing a companies financial statements and health, it s management and competitive advantages, it s competitors and market conditions.

18 Price-Earning Ratio P/E Ratio (Market Value per share/earning per share) used to give an idea of what a stock should actually be worth. This is useful because stocks can many time become overpriced due to sudden spike in popularity, media converge and other factors. Role of thumb good P/E ration is 1.5-2

19 Diversifying Don t put all your eggs in one basket A portfolio of of different stocks is considered fully diversified. Why should an investor diversify?

20 Useful Links Investopedia.com Finance.yahoo.com Finance.google.com Thestreet.com Marketwatch.com Financialpost.com Theglobeandmail.com report on business Bloomberg.com for more sophisticated and advance investors.