Covering the Stock Market Understanding the stock market

Covering the Stock Market

Understanding the stock market What is the stock market? What are the rules governing the stock market? What is the bull market and what is the bear market? What are the factors affecting the rise and fall of the stock market?

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The Stock Market: How it works WHAT ARE STOCKS? Initial Public Offering TYPES OF STOCKS: common and preferred Market Capitalization : total stock market value of the company Small cap stocks; mid-cap stocks; large-cap stocks Growth Potential : investors' expectations of companies' future growth potential Growth stocks; value stocks; blue chip stocks

Nine most common sectors Basic Materials - Companies that extract natural resources. Conglomerates - Global companies that are in different industries. Consumer Goods - Companies that provide goods to sell at retail to the general public. Financial - Banks, insurance and real estate. Healthcare - Healthcare providers, as well as health insurance, medical equipment suppliers and drug companies. Industrial Goods - Manufacturing. Services - Companies that get the products to the consumer. Technology - Computer, software and telecommunications. Utilities - Electric, gas and water companies

What Determines Stock Price? Price changes reflect supply and demand. Expectations of corporate earnings, or profits. If the company pays a dividend…

How Does the Stock Market Work?

BENEFITS OF INVESTING IN STOCKS Stock ownership takes advantage of a growing economy. They are the best way to stay ahead of inflation. Easy to buy. You make money in two ways: buy low and sell high; stocks of companies that pay dividends They are easy to sell.

DISADVANTAGES You could lose your entire investment. Stockholders are paid last the company goes broke. It requires a lot of time. It can be an emotional rollercoaster. You compete against professionals. if

HOW DOES STOCK INVESTING AFFECT THE ECONOMY? Allow individual investors to own part of a successful company Provide the capital for companies to grow large Give an assessment of how valuable investors think the company is

STOCK MARKET CRASH: EXAMPLES, CAUSE, IMPACT Definition Causes: panic Examples: Ø Ø Ø The Stock Market Crash of 1929; The crash of 1987 The Asian Financial Crisis in 1997 The Dot Com Bubble crashed in 2000 The Market Crash of 2008 The Flash Crash occurred on 2010

How It Affects You Bear market: stock market decline of 20 percent or more that lasts 18 months.

COVERING THE STOCK MARKET The markets allocate capital both in the initial issuing of shares by a company and in subsequent trading of those shares. The markets offer an opportunity for investors of all types to demonstrate their views about the future prospects of companies by buying shares in companies they think will make good profits.

Local Events Spur International Market Consequences The Language of Financial Markets Regulation and Transparency in Stock Markets

The Role of the Journalist Who Covers the Stock Market They will be covering the company as it seeks to list on the exchange (issue shares for sale). They will be covering the day-to-day trading that re-values every listed company again and again as the trading day continues.

The Role of the Journalist Who Covers the Stock Market Telling their viewers and readers why the company wants the money and what the opportunities and risks are of buying its shares. Uncovering the motives of market participants in deciding to buy and sell is a big part of the task of any market journalist.

How modern markets have been built from scratch as opposed to those that evolved from the coffee houses of the 18 th century The economic benefits of stock markets The analyst ’s role in the function of the stock exchange How the market actually functions Getting to know the workings of a market by talking to experts about what dealing costs and settlement are How money is raised in the market What trading systems are and how they work How the financial community, including journalists, cope with a market crash

In-class Exercise Pick a day of the past week and look at a dozen stocks in the industry/sector you follow. Did they rise or fall for the day? How did they do compared to the rest of the stock market? Was there something that happened during the day that caused stocks of companies in one industry to rise or fall while the rest of the stock market moved in the opposite direction?

Mid-term presentation Pick one stock in a certain industry (for example, energy, agriculture, finance, internet, environment, pharmaceutical). Make a 7 -min presentation of the stock on Nov. 13 th, 2019: delve into the industry fundamentals and the inner workings of these listed companies, their trials and tribulations, their shareholders, and their chief executives’ hiring and firing as well as their competitors.