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Money Management & Stocks. Meeting #2: 13 September 2005. Agenda. Re-Statement of Club’s Mission Why Investing is Important Basic Money Management How to Analyze Stocks Guests: Mr. Kirby & Mr. Prokop Sector Sign-Ups. Investment Club’s Mission:. - PowerPoint PPT Presentation
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Money Management & Stocks
Meeting #2: 13 September 2005
Agenda
Re-Statement of Club’s Mission
Why Investing is Important
Basic Money Management
How to Analyze Stocks
Guests: Mr. Kirby & Mr. Prokop
Sector Sign-Ups
Investment Club’s Mission:
1. Educate Cadets regarding Investing and personal financial planning
2. Maximize returns on the Spragins Fund
We’re here to turn this…
Into This!!!
BLUF of Money Management:
Start saving your money early Make wise financial decisions Have a Budget Know the Tax Code (website) Help your Soldiers
A quick Cow Loan example
Maxing out your Roth IRA with only your Cow Loan
Earn 10% compounded annually
Equals $1,770,316.88 @ 65 Or $2,851,113.04 @ 70
A more Lucrative example
Maxing out your Roth IRA till age 65 (marry at 26)
Earn 10% compounded annually Equals $6,104,684.41 @ 65 Start withdrawing $600,000 per year
@ 66 You’ll have $8,941,887.22 @ 100 still
in your account earning interest
0
10
20
30
40
50
60
70
Number of Years
FV
of
$1
0%
5%
10%
15%
CompoundingInterest Rates
“What is ze most powerful force in the universe?”Compound Interest!
Buying a Car
I can buy a $30k Jaguar or stick with my Honda
Perform a Cost/Benefit Analysis The Jag actually costs me $70k Is a new Jag going to give me $70k
worth more of personal joy than my Honda? No. Go with the Honda.
Create a Budget Extremely important after Graduation You’ll be tracking more than a dozen
monthly expenses Form good habits now Some of you will be amazed at where
all your money goes A budget Now will create good
spending habits
Sample Financial PlanExpense Breakdown
Total Taxes
Rent
Cow Loan
Auto Insurance
Renters Insurance
Life Insurance
Groceries
Gas
Car Maintenance
Utilities
Cable TV
Electricity
Water
Trash
Local Phone
Long Distance
Cell Phone
Internet
Credit Card Payment
Other Debt Payment
Entertainment/Leisure
Other
Available for Saving
Helping your Soldiers w/ their $$$
AVOID Payday Lenders (see link) Cause a “debt trap” You’re the first line of defense
Educate yourself More Importantly, know who to refer
them to before a problem All Posts have rarely used but high
quality people who can help Show them these slides (bonuses)
What is a Stock?
A Stock (Certificate) represents a small slice of a company that can be bought and sold.
Companies “go public” to raise money; they will never again get money from investors after the IPO (Initial Public Offering).
P/E Ratio and Market Capitalization Investors hope their company increases its
earnings and either reinvests them in the company to increase future earnings or pays them a dividend.
Growth Investing Find the next MSFT or WMT Look for continuing earnings growth They have higher “trailing P/Es”
But lower “forward P/Es”
Value Investing Find a MSFT or WMT that is
currently trading at a discount Make sure of sound fundamentals Contrarian Investing
Next Time How to start investing (or make
better investment decisions) Setting up an IRA Analyzing Mutual Funds Risk Tolerance and Goals Diversification and Asset Allocation
QUESTIONS???
Guest Speakers
Questor Management Company
Mr. Kevin ProkopDirector
Mr. Dennis KirbyVice-President of Private Equity
Sector Sign-upsPrepare to Work! (min of 4-5 hours)
Technology Giles Evans E-3
Energy James McCray C-3
Consumer Goods David Marold B-1
Healthcare Bryan Spencer A-4
Financials John Howie H-1
Screening Criteria 1. Minimum Price per Share $5 (has to do with listing
requirements and whether or not institutional money can invest in stock)
2. Price to Sales maximum 5 3. Inside Ownership Minimum 1% (management has some
stake in the company) 4. Institutional Ownership Minimum 15% (does smart money
invest in this company) 5. Price to Earnings maximum 50 (although we prefer
something more reasonable compared to sector averages you'll see on Quicken)
6. Price/Earnings to Growth (PEG) < 1.0 (is the market pricing the stock to fully reflect the stock's EPS growth?)
7. EPS minimum of $0.01 (this eliminates companies losing money)
8. Total Revenue minimum $50 million (so it is not a mom and pop store)
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