Stock Market

Why do we need the Stock Market?

• 1700’s most businesses were small family owned businesses

• They had a difficult time expanding

• This need for large amounts of money led to the beginning of the stock market

What does the company do with the money they receive in stock

purchases?• You are actually buying ownership• The money usually foes to expanding

the business• The profit then is returned to the share

holders in dividends.

What is a Stock Exchange?

• Definition: A market for buying and selling stock

United States Stock Exchange

1. New York Stock Exchange (NYSE)• Largest and most powerful exchange• 1792 Established• Only the largest and most established

companies in the country (Blue Chip)

• 'Blue-Chip Stock‘ - Stock of a well-established and financially sound company that has demonstrated its ability to pay dividends in both good and bad times.

• Dow Jones Industrial Average - is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.

U.S. Stock Exchange

2. Nasdaq• The National Association of Securities

Dealers Automated Quotations• Created in 1972• Does not have a trading floor but instead is

all computerized

Stock Market• Bull Market: When the stock market

rises steadily over a period of time.– Investors expect an increase in profits and

thus buy stock.– 1980s and 1990s

Stock Market

• Bear Market: When the stock market falls for a period of time.– Investors sell

stock in expectation of lower prices

History of the Stock Market

Picking Stocks

• Choose companies that manufacture the favorite things in your daily life, such as soft drinks, shoes, clothes, restaurants, etc., and make sure they are publicly traded companies by checking the labels and packaging of the product

• Get company names from work places where your parents, friends, relatives, and neighbors have firsthand experience about the quality of the company.

Picking StocksDow Jones (30)

Reading Stock Quotes