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Week Two: Stock, Mutual Fund, ETF 1. Terms to look up if you dont understand.

Securities: Financial instruments, include Stock, Bond... Equities: stocks. Ticker: also called symbol or quote, is the letter of a companys name on stock ex change, ex: Apple is AAPL, Microsoft is MSFT Stock exchange: The market where stock and ETF are traded. Return: the profit a person can make by percentage, in a given period CD:certificate deposit, a investment that means saving the money in the bank wit h fixed years to get the banks interest public company( or publicly traded company): A company issues stocks, and its own ership is publicly traded and owned by people, Any one can own the part of the c ompany by buying their stocks. Private Company: A company doesnt issue stocks. The companys ownership is held by limited amount of people, and not every one can be the owner. Index: A group of best chosen companies gathered together, to represent the whol e market. Sector:The area of business a company does Industry: a specific business area SEC: A government organization that regulate public companies Year to Date Return( YTD): The return a security made so far this year 1-Year Total Return: also called annual return, the profit total return in a yea r, different securities set the beginning and ending date for a year is differ ent 3-Year Total Return (Mkt): the return in three years Stock: Company Ownership Mutual Fund: A fund that helps people to invest their money by buying stocks, th e investors( people who join in a mutual fund) usually pay fees for the fund manag ers. The fund manager take care the mutual fund. ETF: A fund that helps people to invest their money by buying stocks. People dont pay fees, and take care the ETF themselves. 2. Here are three types of investment relates stock market: Stock, Mutual Fund, ETF Name Description Advantage Disadvantage Stock Ownership of a company. In the long-run history, the highest return inve stment in the world 1.Gives potential high return 2.Different Strategies 3.For knowledged investors 1.Risk 2.A company may bankrupt 3.No guaranteed return Mutual Fund 1. A manager control the funds portfolio, the fund usually contains more than 20 companies( stocks) The performance is decide by the managers skill 2. The fund manager can invest on any securities, such as bond, stocks, CD

1.Safe investment if the manager is skillful 2. the fund mostly wont fail ( bankrupt) 3.Suitable for beginning investors or investors whoever lack investing knowledge 1. Limited return b/c the fund invest in many companies in different field for safety purpose 2. The manager may not earn more than the individual investors 3. A fee is charged usually, And require a minimum dollar to stay in the fund Exchange Traded fund (ETF) 1. A manager control the funds portfolio; But the investors decide when t o buy and sell. 2. The fund manager can invest in equities(stock) or bonds 1.Required some knowledge 2. If the investor is skillful, he or she can get high returns 3. Trade in the stock exchange, similar to stocks 4. No fee charged, No minimum account required Smaller return than stocks because the fund invests in different compani es. 3.Research by using tickers: using this websites to receive the information about the market: www.finance.yahoo.com research ticker examples, security area: technology 1)stock: MSFT, is microsoft 2)ETF: VGT, Information Tech ETF organized by Vanguard company 3)mutual fund: VITAX, Information Tech mutual fund organized by Vanguard com pany

Dont worry about all the information below, because you will know and use them ag ain and again. Because we want to choose the security that gives extraordinary returns, we will always compare the securitys performance to the markets, if the security h as higher return than the market, we say that it beat the market. Stock: Microsoft has 33%return in the past 5 years whereas the market has 41%re turn, MSFT didnt beat the market in the past 5 years. It wasnt great in the past 5 years. /1 In the upper left corner of finance.yahoo.com, type in MSFT /2 on the left side of the page(blue area), the fifth bold word Company means this is a publicly traded company: /3 Under the Company, there are 5 basic yahoo pages to describe the company. The pages under Company include most of the information we needed to analyze a company, so is our main focus to study.

profile: description of the company; important index that hold microsoft is Dow J one; Sector technology means the company makes money by relating to technology; Industry is Software & Servic es; full time employees can tell the size of the company. Key Statistics Gives important ratios on how strong the company is. Ratios will b e our focused study in later meetings SEC filings contains the companys financial statements filed to SEC by the companys accountants. The financial report is very important for investors, and we will l earn that soon. Competitors contains the competitor with Microsoft, notice that comparing companie s is comparing their ratios, but at least we know now that MSFTs competitors are Apple(AAPL), Google(GOOG), Orcl( Oracle) the tickers representation is under the first chart. Industry, similar to the competitors, the difference is that using MSFT to compare w ith the leading companies that are best on different areas(ratios again) Component all the index that contains MSFT. ETF: VGT has 53%return in past 5 year, but the market has 41% return, yes, the V GT ETF beat the market!!!A good Investment Because ETF is managed by a manager, we only need to know the performance and hold ings. /1 In the upper left corner of finance.yahoo.com, type in ticker VGT /2 on the left side of the page(blue area), the fifth bold word ETF means this sec urity is a ETF /3 Scan the Profile page, it has description and the size of the fund /4 Focus on watching on the Performance page, the returns are important for any E TF, Year to Date Return (Mkt): YTD, measures how well is the security so far this ye ar. 1-Year Total Return (Mkt): return in a year 3-Year Total Return (Mkt): return in three years, the higher the return means the better the security. /5 The Holdings page, tells what securities make up the fund. The stocks has 99.92 %, means that the funds money is invested 99% in the stock. The top ten holdings are Apple,13%(means that inside the 99.92%of stock investing, the ETF bought 13% of Apples stock. For a ETF, its important to know the holdings, b/c how well the ETF will perform depends on its holding. This page also tells what sector the ETF mainly invest in, that is technology. Mutual Fund: The mutual fund has 12%return, but the market has 41% return, no,it didnt beat the market!!!A terrible Investment Since Mutual Fund is not our focused learning in this club, we will just look ar e the Profile, Performance, and Purchase Info /1 In the upper left corner of finance.yahoo.com, type in ticker VITAX /2 on the left side of the page(blue area), the fifth bold word FUND means this se curity is a Mutual Fund /3 Scan Profile The Performance page has a detailed gains or loses. the red number means that t he fund lost money in those years. This funds performance is terrible compare to the stock market, because the market(Dow) has a41%return during the last 5 years , which means it turns a persons $1000 to $1410 whereas the well managed mutual f und turns a person to $1120. However the fund may beat the markets average return . No matter what, this information page remind us that if we are well educated

and analysing companies well, well be perform better than the mutual fund manager Holdings are similar to the ETFs Purchase Info tells u that how much you must put your money in the fund when you f irst invest, which is woww, $100,000. Here shows another bed side of mutual fund . The page also list where to buy this fund.

Conclusion: In this case, the vanguard ETF has a better return than microsoft, but it doesnt mean that ETF is better than stocks. (Apples stock has rise 470% during the last 5 years, whereas microsoft 33%, and ETF 53%. If a person has the foresight for Apple and invest his or her 100 dollars to buy only one share, today, one share worth 470 dollars, rise almost 5 times.) securities return risk knowledge stock highest risk a lot ETF higher not very risky some Mutual Fund low almost no risk a little

This weeks information about stock and ETF on yahoo pages is important and you wi ll use them to analyze a securities again over again, so dont worry if u didnt get them immediately. I will include different financial terms in every document, so if you dont unders tand a term in a new document, either use this website: www.investopedia.com to research the definition or look for the previous weeks.