GI Beginners’ Series: Class II

November 15, 2007

Class I Review

Exponential Nature of Growth Concept of a Stock

Represents ownership Investor: Access to dividends and future earnings Company: Access to more capital

What Make Stocks Move Company-specific General market-movers

Class I Review

Market Structure Exchanges, Sectors, Industry Groups Indices

Terminology Market Sentiment Types of Positions Stock Classifications

Supply-Demand Influence on Prices

Supply-Demand Influence on Prices

Supply-Demand Influence on Prices General Dynamic

Supply increases or Demand decreases Price decreases

Supply decreases or Demand increases Price increases

Stock Dynamic More buyers than sellers

Price increases More sellers than buyers

Price decreases

Buying/Selling Pressure

Stock Price Increase Buyer’s (Bull) Market Implies optimism

Stock Price Decrease Seller’s (Bear) Market Implies pessimism

Strength of Increase or Decrease Day’s Volume vs. Average Daily Volume

Reading Stock Quote

Why Bother Quick snapshot Pertinent information without excessive research

Components Last Trade, Change, Bid, Ask Open, Close High, Low Market Cap Volume, Average Volume

Price-to-Earnings Ratio

How much, per $ of earnings, investors are willing to pay for each share

P/E Ratio Based on latest earnings report

Forward P/E Ratio Based on forecasted earnings

Price-to-Earnings Ratio

Implications

Growth Stock High P/E Ratio

Forward P/E > P/E Lower earnings forecasted

Forward P/E < P/E Higher earnings forecasted

Reading Stock Quote

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Class 3: November 29

Fundamental Analysis

Market Forces GDP, Oil, Inflation Beta

Executing Trades Online