Please note that this journal assignment is based on a pretend scenario and fictitious money. However, the assignment is based on actual stock pricing in real time situations. Do not invest your personal money for this assignment.
The capital markets and the ability to raise funds for corporate uses are essential to the U.S. economic systems. For this assignment, imagine that you have $25,000 to invest in U.S. companies. You are buying used stock. The company got the money when it issued the stock originally. You will be buying it from an existing owner.
You are investing, or buying the stock, because you believe the company will make money and pay you a dividend in cash. Each share of stock that you buy entitles you to any dividend declared and a vote at the annual stockholders’ meeting.
The stock also allows you the ability to earn your money back by selling the stock. Of course, investing in stocks is risky and there is the possibility that the stock you buy will be worth less when you want your money back. The company is not obligated to give you any of your money back. You will only get your money back if another investor wants to buy your stock.
For your first journal entry complete the following:
- Indicate the companies you are investing in: Select three (3) US companies that are publicly traded. Please use your knowledge and experience and pick as many stocks as you’d like. Make sure you are practicing good diversification. Jim Cramer, Money Manager, on CNBC, plays a game at the end of his show called “Am I Diversified.” Check out a short clip to get a sense of industry diversification at https://www.youtube.com/watch?v=f3lDxexupcE.