INVESTING PT III

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INVESTING PT III

• SSG HENRY
• 64TH BSB, CFN
• PH 526-4941 PG 279-3951

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PUTTING IT TOGETHER

• NOW THAT YOU UNDERSTAND THAT BUYING STOCKS CAN BE
  COMPLEX, HOW DO WE GO ABOUT PUTTING IT TOGETHER?

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STEPS TO FOLLOW

• SET YOUR GOALS
• START AN ACCOUNT WITH A BROKERAGE COMPANY.
• DONT BE GREEDY
• LEARN BEFORE YOU EARN
• HIRE A PROFESSIONAL TO TEACH YOU IF NEEDED

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BULLS, BEARS AND HOGS

• BULLS MAKE MONEY
• BEARS MAKE MONEY
• HOGS GET SLAUGHTERED

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Price of one share of Microsoft Jan 1996 to Dec
1999
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Price of one share of MicrosoftJan 2000 to Nov
2003
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SECURITIES PROTECTION

• Security Investors Protection Corporation (SIPC)
  Insurance fund covering investors brokerage
  accounts with member firms.
• Most brokerage firms belong to the SIPC, which
  insures each account for up to 500,000 in cash
  and securities, with a 100,000 cash maximum.
• Important The SIPC does not guarantee the value
  of any security (unlike FDIC coverage).
• Rather, SIPC protects whatever amount of cash and
  securities that were in your account, in the
  event of fraud or other failure.

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SEARCH USING STRICT PARAMETERS

• USE MSN MONEY STOCK SCREENING POWER SEARCHES
• YAHOO FINANCE STOCK SCREENER
• LEVEL II QUOTES TO CHECK VOLUME

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MARGIN ACCOUNTS

• In a margin purchase, the minimum margin that
  must be supplied is called the initial margin.
• The maintenance margin is the margin amount that
  must be present at all times in a margin account.
• When the margin drops below the maintenance
  margin, the broker can demand more funds. This is
  known as a margin call.

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Margin Accounts

• In a margin purchase, the portion of the value of
  an investment that is not borrowed is called the
  margin.
• Of course, the portion that is borrowed incurs an
  interest charge.
• This interest is based on the brokers call money
  rate.
• The call money rate is the rate brokers pay to
  borrow money to lend to customers in their margin
  accounts.

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Example The Workings of a Margin Account, I

• Your margin account requires
• an initial margin of 50, and
• a maintenance margin of 30
• A Share in Miller, Moore and Associates (WHOA)
  is selling for 50.
• You have 20,000, and you want to buy as much
  WHOA as you can.
• You may buy up to 20,000 / 0.5 40,000 worth
  of WHOA.

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EXAMPLE
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Example The Workings of a Margin Account, II

• After your purchase, shares of WHOA fall to
  35.
• New margin 8,000 / 28,000 28.6 lt 30
• Therefore, you are subject to a margin call.

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BOTTOM LINE

• TAKE THE TIME TO LEARN AND IT WILL PAY OFF
• DO BACKWARDS PLANNING AND REMEMBER THERE IS
  ALWAYS A BETTER WAY OF DOING SOMETHING

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QUESTIONS????

• LETS GO TO THE INTERNET