Dear YOUNG MONEY,
I am trying to write a persuasive speech about investing in stock. I have chosen Kraft Foods as my company to invest in and have to show their price history and tell why it’s gone up or down, sales volume, earnings per share, debt to equity ratio, and dividend history. I have no idea what any of this is…can you help me?
Thanks for asking us about your speech. It is an exciting opportunity to learn about investing and have fun in the process. You didn’t say how long the speech could be or how long you have to prepare it, so I will give you information that can help you right now and as a long-term investor.
Some broad guidelines first: Decide whether you are talking to investors or traders. Investors are people who buy a stock and hold it for a long time–years. Traders are generally people who move in and out of a stock quickly within days, weeks or months. Are you talking to socially conscious investors, those who care if the company is a “good” citizen in its community, its environment, in the world?
As you look at all the data and the circumstances, you are asking what elements in the economy, in the trends in people’s lifestyle, in the supply of raw materials, etc., will help this company prosper, and what elements will be obstacles.
Do you use any Kraft food products yourself? Why? What do you like about them? Why would you recommend them? Have you ever called the phone number on one their products and asked their customer relations people a question? Have you gone to their website? Have you asked their corporate office to send you their annual report?
Why do these things? Because it’s a real company that you and those you are talking to have interacted with. So if part of your speech is to persuade them to buy the stock or not buy it, you might want to draw them in on the quality of the product.
Consider the fact that every time you buy a product or go to a restaurant, you are “voting” for that company to exist. Would you buy stock in a company that was abusing workers in “sweat shops,” or would you prefer a company known for fair employee and supplier relations? You may want to present a paragraph with the emotions’ approach to the company as well as the data analysis.
As for the numbers, there are some fine books that will not only help you with the terms you asked about, but also put those terms in a context that helps you see the big picture. Get a copy of How to Buy Stocks by Louis Engel and Henry L. Hecht or Peter Lynch’s Learn to Earn: A Beginner’s Guide to the Basics of Investing and Business. A good financial terms dictionary can help too. I recommend The New York Times Dictionary of Money and Investing.
There are many other solid books and theories about how and why to buy stocks. These will steer you in the right direction as you explore the intriguing, risky, emotional and creative world of bringing a new product or service into the world.
Wishing you success,
Penelope S. Tzougros, Ph.D., ChFC, CLU
Dr. Tzougros is an author, speaker, radio show host and registered representative offering securities and additional investment advisory services offered through WS Griffith Securities, Inc. Member NASD/SIPC. 95 Sawyer Road, Suite 500, Waltham, MA 02453. (781) 893-0597.
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