• Earnings Per Share and Stock Values

o P/E Ratio (Price per share / Earning per share)

 High P/E ratio (over 30) high expected growth in the future
• IPO: Initial Public Offering
o Benefits of “going public”
 Easier to raise capital, liquid market for shareholders (easy to
exchange the shares for cash), prestige.
o Costs of “going public”
 Increased regulation, increased impatient scrutiny, loss of control.
• How to pick stocks
o Diversify (spared it around), buy and hold for the long term, Run form
guaranteed high returns.
• Mutual Fund
o Managed Fund
 Pro’s choose stocks
 Usually frequent changes in stock
 Attempt to out-guess or “time” the market
o Indexed Fund
 Stocks chosen by mathematical rule
 Very few changes in stock
 Diversification
 Basically buy and hold strategy
 Most common S&P 500 Index
• Start with $1000 and add $100 each month
• Cant use Finashal statements to pick stocks
•