BUY, SELL OR HOLD

PRESENTED BY:(INSERT YOUR NAME & FIRM LOGO

HERE)

FINRA REVIEWED, JUNE 17, 2014THE STOCK MARKET GAME

IIF@SIFMA.ORG

HOW ARE YOU DOING?

• How did you get started?• Has your portfolio increased in value?

Decreased? Why?• Are you holding onto an investment whose

performance has surprised you?• What investment lessons have you learned so

far?

ECONOMIC CYCLES

1. If ten people want new cars and only seven cars are available, the dealer can increase the price because some people will pay more to get what they want. Almost overnight car prices go up.

2. People – including the workers making the cars—demand higher wages so they can afford to buy a car. The cost of building the car goes up—so the selling price goes up. This is the BOOM.

3. When the car costs more than people can afford, they stop buying. Fewer cars are needed, and the factory lays off workers.

5. So if ten people now want cars and only seven are available, the cycle begins again.

4. Unemployed people buy less of everything, so the economy slows down. This is known as a recession or BUST. Car dealers—desperate to sell their small but stagnant inventory—offer their cars at sale prices or with special deals.

=+

FOR SALE

Reduced!

=

THE VALUE OF STOCKA stock’s price seldom moves in the same direction for more than a few days, though it may gain or lose a lot over a month or a year. A stock can often go down when the market is weak, a competitor introduces a new product, or if profit growth slows or falls.

Usually a stock climbs in price when the overall stock market is strong. The company’s products or services are in demand and its profits are rising. When all three happen together, the increase can be fast.

No one thing determines a stock’s highest price. As long as people are willing to pay more for it, it will generally go up. But when investors sell shares or the market falls, prices can drop just as quickly or quicker than they went up.

The Blues at BIGCO.

The peaks and valleys in the price of a stock show you how prices may change.

BIG Co.

Stock Share Price

Part 1

THE VALUE OF STOCKFollowing a period of time where a stock’s price goes down, it can go up again or continue to fall. It depends on how the company is doing and what the markets are doing. In this example, the price seesawed between $100 and $120 for several years.

If a company’s shareholders aren’t happy, has serious management problems or is losing ground to competitors, its price can fall quickly even if the rest of the market is going up. That’s what happened here.

However, strong companies can often cope with big drops in stock price and can usually come back if internal changes, and external conditions create the right environment and investors respond with renewed interest.

Stock Share Price

The Blues at BIGCO.

The peaks and valleys in the price of a stock show you how prices may change.

Part 2

EVALUATING COMPANIESA company’s earnings and what it has paid in dividends help you see whether a stock might go up or down.

DIGEST OF EARNINGS REPORTSX-YZ TRANSPORT (Nq) X-YZ A-B PHARM (A) A-BP Year Dec 31: 1998 1977 Quar Dec 31: 1998 1997Revenues…….. $113,431,000 $65,170,00 Sales……… $4,711,000 3,374,000Net Income…… 60,000 270,000 Net Income … (516,000) (1,242,000)

Avg shares….. 8,439,000 6,110,000

Past performance is no guarantee of future results. This information is hypothetical and is provided for informational purposes only. It is not intended to represent any specificreturn, yield or investment, nor is it indicative of future results.

REBALANCING

• Do you believe your portfolio is diversified?• Do you have at least one bond, stock and

mutual fund in your portfolio?• How does your team decide when to buy, sell or

hold?

QUESTIONS

THANK YOU