This document serves as a beginner's guide to stocks, explaining what stocks are, the types (common and preferred), and important terms related to trading. It covers essential concepts such as market indices, ticker symbols, options, dividends, and investment strategies for both long and short-term. Additionally, it highlights the significance of understanding the stock market's dynamics and provides resources for further learning.

1. Beginners Guide To Stocks

2. What is stock?
∗ Stock is ownership in a
company plan and simple
∗ Stocks are also known as
shares

3. Types of Stock(Common)
∗ Common stock- Allows you to
vote on members of the board
(the board establishes policies
and goals selects chief
executives, approves annual
budgets and sets salaries)
∗ Common stock is what you
will see when you Google a
company’s stock

4. Googling a Stock
∗ When you Google a stock you’ll see
this
∗ A marketplace where the stock is
sold and bought a.k.a. traded i.e.
NYSE
∗ A Market index measures the
performance of a few selected stocks
(a portfolio) against other stocks on
the market .The major US indices are
the DOW,NASDAQ and S&P 500
∗ The circled letters are known as a
ticker symbol and are used to identify
a stock in the marketplace.

5. Ticker Symbol Cont’d
∗ Ticker symbols for options have symbols
based on the stock they are derieved from
for example an Apple(AAPL) option would
be AAPL131019C00485000
∗ An option allows you to buy a stock
contract( 100 shares ) at a certain price.
This certain price is called a strike price
∗ Options expire but are good for quick
sales

6. Options Cont’d
∗ There are two types of options: call
options and put options
∗ When you exercise a call option you
promise to sell
∗ When you exercise a put option you
promise to sale at a preset price

7. Dividends
∗ Dividends are a percentage
of earnings from ownership
of a stock

8. ∗ Preferred stockholders receive dividends before common
stockholders
∗ Preferred stockholders usually don’t have voting rights
Types of Stock( Preferred )

9. Stock Classification(Sectors)
Stable(Defensive)
∗ Utilities(Georgia Power)
∗ Consumer staples(Tyson)
Volatile(Cyclical)
∗ Basic Materials(Gold)
∗ Capital Goods(Lockheed Martin)
∗ Communications(Netgear)
∗ Consumer Cyclical(LG)
∗ Energy(Shell)
∗ Financial(Visa)
∗ Health Care(Tylenol)
∗ Technology(DELL)
∗ Transportation(Southwest)

10. Terms to know
∗ Ask-The price you’re willing to sell at
∗ Bid-The amount you are willing to buy at
generally this is also the ask price
∗ Bid Size-The number of shares you are
willing to purchase at the bid price
∗ Close-The price at closing(4pm weekdays)
∗ High-The highest price the stock was bought
for
∗ Low-The lowest price the stock was bought
for
∗ Market Capitalization-number of public
shares X price per share
∗ Open-The price at open(9am weekdays)
∗ Volume-The number of shares being traded
on the market

11. Terms to Know Cont’d
Change-The difference between the current price and the previous day’s price
Market Index – A list of stocks on the market in a given group that give a picture of the current market conditions.
NYSE-groups well established companies
NASDAQ-groups tech related companies

12. ∗ Float-Total number of shares
∗ Short Float-The percentage of shares short in relation to
the number of shares that make up a stock’s float.
Terms to Know Cont’d

13. 1. Stock split-the number of shares are split and the value
is halved.
2. Mergers and Acquisitions
1. The smaller company is usually bought at a premium ex: If
the smaller companies stock is $10 a share and the larger
company pays $15 a share then your stock is now worth
$15 or a $5 check
How Company moves affect Stock

14. Investment Strategies

15. Investment Strategies
Long term
∗ Hold stock for a year or more and
dump it for profit when prices go up
a.k.a Buy and Hold
OR
∗ Let dividend payments buildup
∗ You pay higher taxes on short term
than long term
Short term
∗ You sell shares for profit quickly
based on merger or buyout
rumors
∗ Current short term buyout
targets include Dish Network,
Family Dollar,Realtor.com
∗ For Advance traders only

16. ∗ http://finviz.com/screener.ashx?v=161&f=fa_opermargin_pos,
fa_roa_pos,fa_roe_o10,geo_usa&ft=4&o=-roe
∗ The link above has filters applied that I use to determine in part
what I will add to my portfolio at any given time
∗ Please make sure you compare companies from the same sector
AND industry to get the most accurate picture.
∗ If you have any questions contact me : c.thornton0114@yearup.org
What to look for