EXPERIENCED MANAGER, DEVELOPER, AND ANALYST

Transcript for Buying Stock of a Public Company

Slide 1 – Title Slide and Credits - Buying Stock of a Public Company
Musical Intro - Jazzy Clavinet by Mike Vekris provided by freesoundtrackmusic.com
Speaker – Hi I’m Ed Pines and thank you for clicking on my slideshare presentation today about buying stock of a public company.

Slide 2 - Disclaimer
Speaker – Before I get started, I just have a brief disclaimer that I’d like to read: I am not a professional stock broker, financial analyst, or money manager. The opinions shared are my own. You should not view the opinions shared as a strategy to follow with any guarantee of making money or any particular outcome. Any investments you might make and the consequences of the investment are done out of your own free will and judgment. All investments carry risk and total loss of the original sum invested is a real possibility.

Slide 3 - Basic Approach
Speaker – With the disclaimer out of the way, let’s get back to the basic approach of buying stock of a public company. There are essentially 4 steps. Pick a company. Evaluate the company. Open and Fund a Trading Account and number 4, Buy and Track the Stock.

Slide 4 - Picking the Company
Speaker – And that brings us to the first point of buying stock of a public company. You want to choose one that’s in an area you know a lot about. Why is that? Because if you already know a lot about a particular area, say you have a passion, like coffee, and you drink a lot of coffee so you go to Dunkin Donuts/Starbucks, you are already going to have a good idea of what it takes to be successful in the coffee business and the coffee area and you have a passion for it. So you will be following developments in that particular area and it will make your research that much easier. The last thing you want to do is buy stock in a company in an area where you don’t know anything about, say medical research or something of that nature, because it will just make your task of researching the company that much more difficult. The next thing you want to do is avoid hot tips. If somebody comes along and tells you about a great company and a great product, yes it might be true, and it might be worthy of investment, but you don’t want to jump in to that particular investment just because somebody said “that’s a great idea, it’s going to be huge”. So you want to take your time in deciding and really do your research.

Slide 5 - Evaluate the Company
Speaker – Part of your research is going to be to evaluate the company and one of the first things you are going to do is determine if it’s publicly traded. You will generally find this information posted under an Investor’s section of the company’s site. Most companies are not publicly traded and this may not be explicitly stated on the company’s site. Since there is no single best process to make this determination, I have added links to an ehow.com article and Yahoo finance which will help to determine the company’s status and ticker symbol. You will want to stick with companies trading on the Nasdaq or the New York Stock Exchange, if you are just starting out, at least that is my recommendation. Because there are other exchanges, but the amount of information you can find about a company on some of those other exchanges is not as great or reliable as what you can find if it’s listed on the Nasdaq and New York Stock Exchange due to the requirements to be listed there. While you are determining if it’s publicly traded, you will want to get the ticker symbol. Most of the time the ticker symbol is going to be a one letter to four letter abbreviation for the company name. For example, Starbucks is SBUX and Microsoft would be MSFT. Normally the ticker symbol will relate to the company’s name but sometimes you will find that it doesn’t. One of the companies that comes to mind is SouthWest Airlines. Their ticker symbol is LUV, kind of a play on Love, which is something that SouthWest Airlines is known for; being a little bit whimsical in carrying out their business objectives. Now, once you have the ticker symbol, it is going to make finding information about the company that much easier. Now it’s time to execute your due diligence on the company’s prospects and finances. This area entails a lot of financial information. So the next slide I have provides some links to financial websites that can help you get started if you don’t know anything about evaluating a company from a financial standpoint. Because one of the things you are really going to want to do is evaluate their competitors, evaluate the company itself, look at all sorts of different things about the market place and that will help you determine whether or not you really want to make the investment.

Slide 6 - Resources to Evaluate Companies
Speaker – On this slide I have listed resources to evaluate companies. There are 2 sections, Investing Basics and Company Information. In the Investing Basics section, I have 2 links, one to about.com and one to fool. com which is better known as Motley Fool. Both of those sites have a great deal information about analyzing a company and its financial performance in the past and where they might be headed in the future. It’s a great starting point in learning about analyzing a company based on their financial performance and I highly recommend that you spend a good bit of time checking out those particular areas. Underneath the Company Information, I have listed finance at Yahoo.com and Google finance, Marketwatch, and Morningstar. All of those are supplemental to what you would have learned in the Investing Basics area. These particular links will allow you take a look at a lot of other companies, find out about their competitors, and dig into almost any aspect of the company that you would like to know more about. I would highly recommend, again, doing a lot of due diligence in order to determine if this stock investment is right for you.

Slide 7 - Open and Fund a Trading Account
Speaker – I have listed the next step as Open and Fund a Trading Account. This easily could have been the first step. But it makes more sense to me if you are just starting out and you are doing your due diligence and taking your time, to open the account at this particular point. Because now you are going to be comfortable with the decision that you have made and you are going to have knowledge of what it is you are looking to do and what you want to buy. So you want to find a broker, that would be the first point, step A. I prefer online, but if you have the financial wherewithal to go with a full-service broker where you would meet with somebody, one-to-one, and they give you advice on investing, you could also pursue that option, but again, I prefer online. I have listed TD Ameritrade, E*trade, and Scottrade, there are others and you can simply Google ‘online stock trading’ to find them. It’s simple to open an account. All you have to do is go to that particular broker’s site and sign up. It will take a day or two, maybe a week, in order to open the account and then also fund it. When you fund the account, you are either going to send a check or set up a wire transfer process and that’s where the time comes into play. There will also be an online agreement that you have to sign that says you will abide by the rules and regulations of trading stocks. But once you have the ticker symbol and all of the research on the company, its competitors, and market place; you are ready to essentially make the investment and this would be the final step before you actually buy the stock.

Slide 8 - Buy and Track the Stock
Speaker – Now that you have completed all of the other steps, you are ready to buy and track the stock. You are going to use the account that you opened to actually buy the stock. You are going to need the ticker symbol, you are going to need to know how many shares of stock you want to buy and you are going to need to know that you have enough money in your account to cover that purchase plus what is normally a transaction fee. Once you have bought the stock, you are now going to have to repeat all of the other steps. You are going to have to follow the company, the competitors, and market place developments using all the research techniques you learned prior. But if this company is in an area of your passion and interests, it’s going to make it that much easier. Because now you have something that you bought that you actually care about and actually follow on a regular basis no matter what. The one thing I would suggest is that you make sure you pay attention to the quarterly announcements of each company that you own. Every quarter they are financially responsible to release the information about the company and its progress. You need to look at that all the time and keep up with it. At some point you are going to want to sell the stock and only you can decide that. It depends on what your goals is, it depends on if things have changed, it depends on if the company is no longer performing the way you thought it would, it depends on all sorts of things that no one can really know. So when you decide to sell, you simply go back into your account, enter that ticker symbol and the amount of shares you want to sell and hit the button. During this entire time, you also want to make sure you are tracking all of your trades for IRS reporting purposes so that every year when you do your taxes, you can do them correctly. And again, these things can vary from person to person and entity to entity, so your own personal situation here could be vastly different than mine. You want to make sure that you adhere to the IRS rules for filing your taxes and for paying for any money that you may make and also for writing any losses that you may have off.

Slide 9 - To Summarize
Speaker – And that brings me to the end of the presentation. To summarize – you are going to pick a company, evaluate the company, open and fund a trading account and then buy and track the stock. It’s as simple as that.

Slide 10 - Conclusion
Speaker – In conclusion, with the information provided you should be able to execute the steps necessary to buy the stock of your choice. Have fun with it and hopefully it will reward you as well. Thanks for listening and have a great day!
Musical Exit - Jazzy Clavinet by Mike Vekris provided by freesoundtrackmusic.com