Transcript Investing in Stocks

CHAPTER 12
Investing in Stocks
Popular e-mail circulated about the Internet in 2002:
“If you had invested $1,000 in Nortel Networks stock last
year, you would have $50.
If you had purchased $1,000 of Budweiser beer, drank the
beer and returned the cans, you would have $78.
Our stock tip for today is to start drinking heavily.”
In 2009, the same e-mail was circulating, but Nortel
Networks was replaced by AIG and Citigroup.
1
2
Investing in Stocks

Stocks represent ownership in a corporation
 Stocks are Equity Financing – “Equities”
 (Versus Bonds which are Debt Financing)

Why do corporations issue stock?
 To raise money to start or expand a business
 To help pay for ongoing business expenses
 As a way to gain prestige and respect within the
industrial community
 As a method of payment for those who started the
firm

The corporation doesn’t have to repay the money
 But the corporation is now a public entity
3
Why Do Investors Purchase Stock?

Share in success of the corporation
 Although you are part owner of the business,
your liability is limited only to your investment
 Income from dividends
total return =
 Earnings distributed to the shareholders

Dollar appreciation of stock value
dividends +
capital gains
 a.k.a. Capital Gains

Possible increased value from Stock Splits (?)
There is no increased value from stock splits. If you had 1 share at $100,
now you have 2 shares at $50; the value is still $100. It is a psychological
increase at best. Warren Buffet of Berkshire Hathaway has refused to split his
stock since its inception. A single shares now goes for around $130,000!
Historical Returns


Historically, stocks have returned 8% to 10%
However, traditionally, half of that return was
from dividends
 Stockholders used to expect 4% to 6% in dividends
each year – That was as much or often more than
bonds returned in interest since stocks were
considered much riskier than bonds

In the 1980’s and 1990’s, dividends fell to
less than 2% and then down to 1% in 2000
 Capital gains were what people wanted

But recently, dividends have risen to over 2%
 This is at a time when savings accounts at banks and
credit unions are paying less than ½%
4
If stocks are the best long-term investment, how
come they are considered so risky?
“For two decades after the Crash of ’29, stocks were
regarded as gambling by a majority of the population.
This impression wasn’t fully revised until the late
1960’s when stocks once again were embraced as
investments, but in an overvalued market that made
most stocks very risky. Historically, stocks are
embraced as investments and dismissed as gambles in
routine and circular fashion, and usually at the wrong
times. Stocks are most likely to be accepted as
prudent at the moment they’re not.” – Peter Lynch
 The Cocktail Party Theory

5
6
Rolling 10-Year Period Returns
20%
15
10
5
Source: The unmanaged Dow Jones Industrial Average, based on average annual compound returns over 10-year periods.
2003-12
1998–07
1993–02
1988–97
1983–92
1978–87
1973–82
1968–77
1963–72
1958–67
1953–62
1948–57
1943–52
1938–47
1933–42
Rolling
10-Year
Periods
1928–37
0
7
Risks of Stocks
Business Failure Risk – the company could fail
 Market Risk – the market as a whole could plummet
 Global Investment Risk – a.k.a. Foreign Risk

 Traditionally, most other countries did not have the
same standards of accounting as the United States
 But that has all changed – Many are better now!
 Currency Risk
 Will the dollar be stronger or weaker over the next 10
to 20 years?

Liquidity Risks
 Not usually a problem with stocks
 Except for very small company “penny” stocks
8
Reducing Risks of Stocks

Risk is difficult to measure
 Even more difficult to anticipate


Emphasizing large company stocks which pay
consistently rising dividends has been one of
the best strategies for reducing risk
Diversification is another major strategy for
reducing risk
 The NAIC Five Stock Rule of Thumb
 One will do poorly and make you sad
 Three will do average (follow the market)
 One will explode and make you very happy

Time is the last and best major strategy
 Over time, stocks have done very, very well
Scams


9
It certainly has not helped the cause of stock
investing that there are many, many scams out
there ready to take your money
One of the oldest and still most prevalent is
called “Pump ‘n’ Dump”
 Scam artists pump up the price of a stock
 Rumors, Lies, Innuendos and now Spam E-mail!
 The Buzz drives up the stock price
 The scammers dump their shares at a large profit
 Price plummets when the suckers realize they have
been taken
 Usually reserved for “penny stocks”
10
Manias

Occasionally, investors get caught up in what are
called “manias” (a.k.a. “bubbles”)






The Internet was the latest stock market mania
Before that, there was the “Nifty-Fifty” of the early 1970’s
The mania of the 1920’s caused the Crash of ‘29
In the 1840’s, there were 400 railroad firms
The “Granddaddy of all Manias” was the Dutch tulip bulb
craze of the early 1600’s
Each time, the phrase was…
 “It’s a New Era” or
 “It’s Different This Time” or
 “The old ways of valuing stock are gone”

Each time, they were wrong!
“Extraordinary
Popular Delusions
and the Madness
of Crowds”
A great read!
11
Stocks and Taxes

Short-term Capital Gains
 Gains from holding a stock less than one year
 Taxed at the investor’s marginal tax rate (like income)

Long-term Capital Gains are taxed at a much
lower rate
 Reward investor for having a long-term perspective
 Big difference for the very wealthy

Dividends were traditionally taxed as income
 Traditionally, taxed at your marginal tax rate
 But now they are taxed at the same low rate as
long-term capital gains
 Has been a huge windfall for the very wealthy
12
Stock Accounts

Traditional brokerage firms
 Full-service Brokers versus Discount Brokers

Internet brokerage firms
 Sometimes called “Deep Discount Brokers”

Other low-cost options
 Low Cost Direct Investment Plans
 DRIPs – Dividend Reinvestment Plans
 NAIC – National Association of Investors Corp

Certificate form
 Only if you are the kind of person who stuffs their
money in the mattress
Stock Certificate Examples
Brokerage Firms
and Account Executives

Traditional brokerage firms will assign you to
an account executive (a.k.a. stockbroker, financial
planner, financial representative)
 Licensed individual who buys and sells securities for
his or her clients


Brokers are paid by commission
Sometimes accused of churning
 Excessive buying and selling of securities to
generate commissions

Discount broker versus full service brokers
 How much advice do you want?
You can research your potential broker or brokerage firm at www.finra.org
13
14
Classification of Stock Investments

Blue chip stock
 Safe investment in strong and respected
companies
 Often referred to as value stocks
 Attracts conservative investors
 Examples: General Electric, AT&T, Coca-Cola

Income stock
 Pays higher than average dividends
 Normally slow growth company in a mature
industry
 Examples: Utility stocks, Banks
15
Classification of Stock Investments
(continued)

Growth stock
 Earns above average profits of all firms in the
economy
 Growth rate 15% to 20% or higher
 Often no dividends at all
 Or a very small token amount
 Most of profits are reinvested into the company
 Stock price should go up as business grows
 But usually very volatile
 Examples: Intel, Dell, Microsoft
Wait a minute! Are Intel, Dell, & Microsoft growth stocks anymore?
16
Classification of Stock Investments
(continued)

Cyclical stock
 Follows the business cycle of advances and
declines in the economy
 Examples: automobiles, timber, and steel


Now, computer chips!
Defensive stock
 Remains stable during declines in the economy
 Examples: Kellogg’s, Procter & Gamble, Pfizer
17
Classification of Stock Investments
(continued)

Turnaround stock – a.k.a. “Goner”
 A company that has fallen on hard times
 Is there potential for a rebound?
 Example: Chrysler in the early ’80s, GM now

Asset play stock
 A company this is sitting on an asset that could
be sold or spun off
 Example: Several years ago, JCPenney was not
doing well but it has an insurance division that it
could have easily sold to raise cash to have kept
the company afloat if it had gotten into trouble

Penny stock
 Butterfly.com, Flim-Flam Inc., etc.
18
What Type of Stock is … ?

Johnson & Johnson
 ExxonMobil
 Google
 Sempra (SDG&E)
 General Mills
 International Paper
 Union Pacific Railroad
 General Motors
 Flim-Flam, Incorporated
 General Dynamics
Blue Chip Stock
Income Stock
Growth Stock
Cyclical stock
Defensive Stock
Turn-around Stock
Asset Play Stock
Penny Stock
19
Securities Marketplaces

A marketplace where brokers who represent
investors meet to buy and sell securities
 New York Stock Exchange (NYSE)
 American Stock Exchange (AMEX)
 Now called the NYSE MKT (?)
 NASDAQ
 The Over-the-Counter (OTC) markets
 Bulletin Board & Pink Sheets (Stay far away from these!)
For hundreds of years, marketplaces were (and still are for the NYSE
and NYSE MKT) centralized locations. With today’s technology, the
vast majority of transactions now occur electronically. Eventually, the
centralized locations will probably disappear.
20
Stock Market Indexes

To gauge the current condition of stocks in
general, financial professionals have created
various stock market indexes
 An market index is essentially just a list of stocks

Dow Jones Industrial Average – the “Dow”
 30 of the largest & best-known U.S. companies

Standard & Poor’s 500 – the “S&P 500”
 The 500 largest companies in the United States

NASDAQ Composite – the “NASDAQ”
 Mostly comprised of high-tech companies
21
Other Stock Market Indexes

Dow Jones U.S. Total Stock Market Index
 (nee Wilshire 5000)
 Approximately 5,000 stocks (large, medium, & small)
 Designed to be a gauge of the entire stock market
 a.k.a. Total Market Index

Russell 2000
 Represents small to medium sized companies

MSCI World Index ( MSCI All Country World Index)
 Designed to represent the global stock market
 Being replaced by the MSCI All Country World Index

MSCI EAFE ( MSCI All Country World Index ex-USA)
 “Europe, Australia, and the Far East”
 Represents foreign markets (without the U.S.)
 Being replaced by the MSCI ACWI ex-USA
22
Bull Markets versus Bear Markets

Bull market
 Investors are optimistic
 More investors are buying stock and the
stock market increases

Bear market
 Investors are pessimistic
 More investors are selling stock so the stock
market declines
 Normally defined as a 20% or more decline
 Versus a “market correction”
 5%, 10% or 15% decline
23
Stock Analysis: Where do you start?

“Show me the numbers”
 Benjamin Graham, Author of The Intelligent
Investor

There are dozens and dozens of numeric
measures
 Some of the most popular over the years
have been…





Capitalization
Book Value
Earnings per Share
Price / Earnings Ratio
Dividend Yield (a.k.a. Current Yield)
24
Capitalization

Market Capitalization
 The number of shares outstanding times the current
price of the stock
 What the company is actually worth (according to investors)

Large-cap stocks
 Greater than $10 billion
 “Mega cap” stocks – $100’s of billions (GE, Wal*Mart)

Mid-cap stocks
 $1 or $2 billion to $10 billion

Small-cap stocks
 $50 million (“micro cap”) to $1 or $2 billion

Penny stocks
 Typically sell from less than $1.00 to $5.00 per share
25
Capitalization

(continued)
Example:
 Price
$50.00
 Number of Shares
* 2,000,000
———————
 Market capitalization = $100,000,000
 This is a small-cap stock
The stock price is (for the most part) irrelevant. You must look
at the market cap to see what the value of the company is.
Examples follow when we get to numeric measures.
Numeric Measures to Consider
When Evaluating a Stock

26
Book Value
 Net worth of company determined by deducting all
liabilities from the corporation’s assets and
dividing the remainder by the number of
outstanding shares of common stock
 For many years, it was rarely close to the stock
price – often one-fifth or one-sixth less
 Now much closer to the stock price (often ½ less)
 If the stock price is lower than the book value,
then there is the danger of the company being
“raided” for the assets and put out of business
Remember our net worth statements?
Numeric Measures to Consider
When Evaluating a Stock (continued)

27
Earnings Per Share
 Corporation’s after-tax earnings divided by the number
of outstanding shares of common stock
 Look for growing earnings per share!

Price-Earnings (P/E) ratio
 Price of one share of stock divided by the earnings
per share of stock over the last 12 months
 A low price-earnings ratio usually means the stock is
a less risky investment
Why would we want to own a business?
Because businesses are in business to earn money!
28
Earnings Per Share

Example:
 Earnings
 Number of Shares
$2,500,000
5,000,000
$2,500,000
 Earnings Per Share = ———————— =
5,000,000
 Earnings Per Share = $0.50
Example: Page 384
29
Price / Earnings Ratio

Example:
 Price
 Earnings per Share
$10.00
$0.50
$10.00
 Price / Earnings Ratio = ——————— =
$0.50
 Price / Earnings Ratio = 20
 a.k.a. P/E, PE
Example: Page 384
30
Price / Earnings Ratio

Historically
 A P/E Ratio of 20 or above was considered high and
reserved only for the fastest growing stocks
 A P/E Ratio of 5 to 15 was considered average

Currently
 For almost thirty years, a P/E Ratio of 40 to 50 was not
uncommon among growth stocks (i.e. $tarbuck$, Google)
 Once during the Internet mania, eBay’s P/E was 10,000!
 P/E’s ratios fall dramatically when the market falls

The P/E Ratio essentially tells you what the
market believes the prospects for a company are
 Also gives you an idea of how long in years it will take the
company to earn its price
 P/E of 20 means it will take 20 years to earn the price
31
Dividend Yield

Dividend Yield
 Yearly dollar amount of income generated by a
stock divided by the current market price

Historically (review)
 Dividend Yields were in the 4% to 6% range

Currently (review)
 Dividend Yields are typically in the 2% to 3%
range (Many are 0% − they pay no dividends)

The Dividend Yield allows you to compare
stocks to other investments
 Such as savings accounts or bonds
32
Dividend Yield

Example:
 Dividends per Year
 Current Market Price
 Dividend Yield
$1.40
$87.50
$1.40
= ————————— =
$87.50
 Dividend Yield = 0.016 = 1.6%
Example: Page 386
33
Numeric Measures Examples
Walmart versus Target
Price
($)
Earn /
Share
($)
P/E
Book
Value
($)
Div /
Div Market
Share Yield
Cap
($)
(%)
($)
Walmart
74.78
$5.02 14.9 $22.86
$1.88 2.5%
$250B
Target
69.05
$4.52 15.3 $25.66
$1.44 2.1% $44.6B
Data as of March 27, 2013.
If you just looked at the price, you would think Target is worth about
the same as Walmart. Look at the market capitalization.
Walmart is worth over 6 times more than Target!
34
Numeric Measures Examples
(continued)
McDonald’s versus Yum Brands
Price
($)
Earn /
Share
($)
P/E
Book
Value
($)
Div /
Div Market
Share Yield Cap
($)
(%)
($)
McD
$98.90
$5.36 18.5
$15.25
$3.08 3.1% $99.2B
Yum
71.32
3.38 21.1
4.78
1.34 1.9% $32.2B
Data as of March 27, 2013.
35
Numeric Measures Examples
(continued)
AT&T versus Verizon
Price
($)
AT&T
Verizon
$36.62
48.94
Earn /
Share
($)
P/E
$1.25 29.3
0.31
159
Book
Value
($)
Div /
Div Market
Share Yield Cap
($)
(%)
($)
$16.55
$1.80 4.9%
$201B
11.60
2.06 4.2%
$140B
Data as of March 27, 2013.
Although it looks as if Verizon is worth more, AT&T is worth $60 billion
more than Verizon. Would you invest in either of these companies?
Consider: Do you think people will ever give up their mobile phones?
36
Investment Theories

Fundamental Analysis
 Based on the assumption that a stock’s
intrinsic or real value is determined by the
company’s future earnings
 Fundamentalists consider the…
 Financial strength of the company
 Type of industry company is in
 New-product development
 Economic growth of the overall economy
I side with the fundamental analysts.
37
Investment Theories

(continued)
Technical Analysis
 Based on the assumption that a stock’s value
is determined by the forces of supply and
demand in the stock market as a whole
 Not based on expected earnings or the intrinsic
value of a stock but rather on factors found in
the market as a whole
 Chartists plot past price movements and other
market averages to observe trends they use to
predict a stock’s future value
I think these folks are all wet.
38
Investment Theories

(continued)
Efficient Market Theory
 Sometimes called the random walk theory
 Based on the assumption that stock price
movements are purely random
 A stock’s current market price reflects its true value
 Wall Street Journal’s “darts vs the experts” finds
sometimes experts win, sometimes not
 They believe it is impossible for someone to
outperform the stock market over the long-term
 Yet there are many long-term investors who do (?)
These people believe that the folks who do beat the market are just
lucky. That may be true for short-term investors, but not for the
long-term investors who consistently beat the market.
39
Stock Buying Strategies

Buy and Hold
 Use fundamental analysis to identify high-quality
companies at reasonable prices
 “Hold it forever”
 Warren Buffet

The Buy and Hold Strategy works well with…
 Dollar Cost Averaging (Remember this?)
 Dividend Reinvestment Plans (a.k.a. DRIPs)
 Low cost investment plans that bypass brokers
I am a “Buy and Hold” kinda’ guy.
40
Stock Buying Strategies

(continued)
Momentum Trading – Dumb
 Uses what is called the “Greater Fool” Theory
 “Buy High, Sell Higher”

Sector Analysis – Dumber
 Buy stocks in hot sectors; sell stocks in stale ones

Market Timing – Dumbest
 Buy as interest rates decline; sell before rates rise

Contrarian – Very smart but also very difficult
 Buy when others are selling; sell when others are
buying
Investors like Warren Buffet are contrarians.
41
Stock Selling Strategies

“Sell when the stock hits its Target Price”
 Analysts often set a “target price” for a stock using
whatever numeric metric they believe in

“Sell when the stock is overvalued”
 You have to decide what “overvalued” means

“Sell when the story changes”
 Peter Lynch
 If the reason or reasons you bought the stock change,
then consider selling

“Sell when you have a better investment offer”
 If another stock is a better buy, swap investments

“Sell when you need the money”
42
Asset Allocation

Fancy term for…
 “How much should I have in stocks, bonds, etc.?”

Many advisors suggest a formula such as…
 Subtract your age from 100 (or 110 or 120)
 That’s the percentage of stocks you should own
 The rest should be in bonds and “cash”
 Example: A 40-year-old would have 100-40 or 60%
invested in stocks and the rest (40%) in bonds

“Poppy-cock!” say others (myself included)
 Buy high-quality stocks
 Once you near retirement, start buying bonds
 But do not give up on stocks entirely
43
Rebalancing


Some of those same advisors that suggest
asset allocation also suggest the technique of
rebalancing
Every year, check to see if your percentages
are still in balance
 If stocks have had a banner year, you might now
be at 70/30 instead of 60/40
 Sell stocks and buy bonds to bring the balance
back to 60/40
 Likewise, if stocks have tanked, sell bonds & buy
stocks to bring the percentage back up to 60/40

Forces you to “Do the right thing”
 “Buy Low, Sell High”
44
Stocks in Retirement


Many advisors suggest that retirees shed the
bulk of their stock investments in favor of
bonds and cash investments
The only problem is…
 People are living much, much longer
 A 50-year-old living today has a 50/50 chance of
living to see 100 years old!

We will revisit this when we get to mutual funds
 Inflation does not retire just because you do

As you near retirement, start migrating your
investments from stocks to bonds
 But do not abandon stocks entirely!
We will revisit this when we get to mutual funds.
45
Other Stock Strategies (?)

Over the years, the financial world has come
up with other “strategies” to help you exploit
the Wonderful World of Finance
 Also, they are excellent sources of high
commissions for stockbrokers (Surprise!)

These “strategies” include…
 Options
 Futures
 Margin accounts
 Selling short
Please stay far, far away from
these so-called strategies. You
are virtually guaranteed to lose.
But don’t take my word for it!
Example: Optionetics.com
46
Information Sources

Media
 Deluge of information from TV, radio, newspapers,
magazines and, of course, the Internet
 Most of it is extremely sensational and of highly questionable
value for investment purposes
 “Wisdom Sold Separately” – Nick Murray
 “My advice? Turn the damned things off!”

Stock Advisory Services
 Charge a fee for their reports – Available at libraries for free
 Value Line, Standard & Poor’s, Moody’s, etc.
 Literally hundreds – no! – thousands of other services

NAIC – National Association of Investors
Corporation – www.better-investing.org
 Investment Clubs
Example: Yahoo!
47
Information Sources

(continued)
BUS-123, Introduction to Investments
 Hint, hint! Wink, wink! Nudge, nudge!

Books






One Up On Wall Street, Peter Lynch
Beating the Street, Peter Lynch
A Random Walk Down Wall Street, Burton Malkiel
The Intelligent Investor, Benjamin Graham
Security Analysis, Benjamin Graham
Annual and quarterly reports from companies
 10-K and 10-Q
48
All Stars of Investing

Peter Lynch
 Fund Manager of Fidelity’s Magellan mutual fund
 “Buy what you know”

Warren Buffet
 “Don’t buy a stock; buy a company”
 Puts emphasis on the value of the entire company

Benjamin Graham
 He was Warren Buffet’s teacher
 “Father of Value Investing”

John Templeton
 One of the first mutual fund managers to invest
globally
49
All Stars of Investing

(continued)
Bill Miller
 Fund Manager of Legg Mason Value Trust
 For 15 calendar years in a row, he beat the S&P
500, an unprecedented record!
 He became (unfortunately for him, as far as I was
concerned) the financial media’s mega-star
 But then he did not beat the S&P 500 in 2006 and
lagged badly in 2007 and 2008 during the turmoil
 He seemed to redeem himself in 2009 when he was
up over 40% beating the 26% return of the S&P 500
 But then again trailed the S&P 500 badly in 2010 and 2011
 He retired late 2012
 I was surprised Legg Mason let him stay as long as they
did. It’s a tough business
50
All Stars of Investing

(continued)
What do all these people have in common?
 Courage to not follow the crowd
 The “conventional wisdom” is usually not very wise!
 A eye for unrecognized value
 Almost a “sixth sense”

Gary Kasparov was once asked why he and
Anatoly Karpov were the two best chess
players in the world
 His answer was astonishingly simple and direct
 “We attack better than anybody else and we defend
better than anybody else”
 These people bought the best companies and
avoided the worst companies
51
All Stars of Investing

(continued)
Speaking of avoidance…
 As a mutual fund investor, I am not looking to find
the next Peter Lynch
 I am looking to avoid the next Charles Steadman

Charles Steadman ran his own mutual fund,
the Steadman American Industry Fund, from
December 1959 until his death in late 1997
 His cumulative total return was -42.9%
 He would have done much better simply placing his
investors’ funds into a savings account at a bank
 He would have done better putting it in a mattress!
 Maybe he came from the life insurance industry…
52
Warren Buffet sez…
“Be fearful when others are
greedy. Be greedy when others
are fearful.”
His mentor, Benjamin Graham said it this way, “Buy when
most people including experts are overly pessimistic, and sell
when they are actively optimistic.”
53
John Templeton sez…
“Bear markets are born of
pessimism, grow on skepticism,
mature on optimism and die on
euphoria. The time of maximum
pessimism is the best time to buy.”
On a similar note, he also said, “To buy when others are
despondently selling and sell when others are avidly buying
requires the greatest fortitude and pays the greatest reward.”
54
Famous Myths & Stupid Sayings

“It can’t go any lower”
 Oh, yes it can! It can go to zero!

“It can’t go any higher”
 Oh, yes it can! If the earnings are continuing to
grow, there is no limit to how high the price can go

“It is only $3 a share – What can I lose?”
 It doesn’t matter how low the price is, the price can
go to zero and you can lose all your money
 Remember: Price is irrelevant; valuation is the key

“It has to come back”
 Have any of you ever heard of Penn Central?
55
Famous Myths & Stupid Sayings
(continued)

“When it rebounds to $10, I will sell”
 A stock has no idea you bought it at $10
 If you wouldn’t buy it now at this price, sell it now!

“The stock has gone up, I must be a genius”
 “Never mistake a bull market for brains”
 Old Wall Street saying

“The stock has gone down, I must be an idiot”
 Ditto (but in reverse)

“It is taking too long”
 Patience is an investor’s most important trait
 Besides, it gives you a chance to buy more!
56
Famous Myths & Stupid Sayings
(continued)

“It’s Different This Time”
 Well, technically, yes. It is different every time.
 But that does not mean you should not pay close
attention to the realistic future prospects for the
earnings of a company, good or bad

“It’s a New Era”
 Ditto (When you hear this one, it is time to sell)

“It’s a Permanent Trend”
 Ain’t No Such Thing! Markets move in cycles.

“Stocks are too risky”
 Even with all the shenanigans and stupidity, they
are still the best financial long-term investment
57
Careers in Stocks

Registered Representative
 a.k.a. Stockbroker, Financial Representative,
Account Executive, Financial Planner
 Background check
 No shenanigans with other peoples’ money
 Must take Series 7 and Series 66
 Series 7 is difficult, 6 hours, 2 months of studying
 Series 66 is much easier, 2 to 4 weeks study
 Must be sponsored by a brokerage firm
 Some brokerages exist simply to sponsor people
 Expect to pay a fee to them for the privilege of being
sponsored
 Many brokerages now sponsoring new recruits!
58
Wanna’ Swap Some War Stories?

Alliance Pharmaceuticals
 Advanced Tissue
 CINAR Films
 CardioDynamics
 Any volunteers?
59
Bottom Line


Stocks are the best long-term financial
investment available
Leave the stock picking to the pros
 In other words, find a good stock mutual fund!
As “bullish” as I might appear to be, my wife and I have 99%
of our stock investments through high-quality mutual funds. I
believe it is simply unrealistic to think I could do better than
professionals armed with an entire global research
organization at their disposal.
I stopped trying as my “Vega$ Fund” lived down to its name…