1. The
Stock
Market
Markets &
Indicators

2. Bull Vs. Bear Market
Bull Market
– Market is
doing well!
People are
optimistic and
buying stocks!
Bear Market – Market is NOT doing
well. People are not as optimistic, and
are NOT buying stocks.

3. Where is the Stock?
Stock Exchanges
• A central place where traders
meet to buy and sell stock.
 People talk to their stockbroker, and
he will contact his representative on
the exchange floor
 Auction-like atmosphere

4. Stock Exchanges
1. New York Stock Exchange (NYSE)
 Oldest & Largest
 2,800 Companies
 Average Price = $33.00
2. American Stock Exchange
 2nd Largest
 Not as strict as NYSE – Smaller
Companies
 Average Price = $24.00

5. Stock Exchanges
3. NASDAQ (National Association of
Securities Dealers Automated
Quotations)
 Stocks traded in an electronic market
 4,000 Companies
 More Risky because stocks are very new
 Average Price = $11.00

6. Market Indicators
1.Dow Jones Industrial Average “The Dow”
 “The Dow”
 30 Leading Industrial Blue-Chip Stocks
2.Standard & Poor’s Composite Index
 “S&P 500”
 Covers Market Activity for 500 of the most
successful stocks
3.NASDAQ
 Monitors fast-moving technology stocks
 Dramatic ups and downs

7. The
Stock
Market
Earnings
& Types
of Stock

8. “Return” on Stocks
“Yield” = the amount of money an
investment earns.
2 Types of Returns:
1. Dividends – A share of profits that a
company distributes to its shareholders.
2. Capital Gains – Selling stock for more
than you paid for it.
• “Capital Loss” = selling stock for less than
you paid for it.

9. The Rate of Return . . .
 How much money are you making
off of this investment?
 Always expressed as a percent of
the original investment, figured
annually
 Ex: 1 share of stock goes from $50 to
$55 in 1 year and pays a $5 dividend.
 How much did your stock yield?
 What is your rate of return?
 Yield ÷ Original Price
$10
20%

10. Types of Stock
1. Blue-Chip Stock
 Very safe stock investment
 Strongest, Largest, Long-standing
Companies
 IBM, Wal-Mart, Coca-Cola
2. Income Stock
 Stock that regularly pays high dividends
 Stock price tends to remain steady
 Gas and Electric Companies

11. Types of Stock
3. Speculative “Penny” Stock
 Stock issued by new companies
 Usually priced at less than $1 per share
 Price can go up and down wildly
 Very risky investment
4. Growth Stock
 Stock in companies who are rapidly growing
 Stock price will steadily grow
 Rarely pay dividends

12. Types of Stock
5. Cyclical Stock
 Stocks that move with the economy
 Economy goes up, Cyclical stock goes up
 Good to purchase when market is low
6. Defensive Stock
 Stock that remains stable during declines
in the economy
 Companies still able to issue dividends
 Many Blue-Chip and Income Stocks

13. Types of Stock
7. Large-Cap and Small-Cap Stock
 Large-Cap - Companies that issue a
large number of shares of stock
 Considered a safe investment
 Small-Cap – Companies that issue a
small number of shares of stock
 Considered a more risky investment,
because they are smaller companies