ShmoopTube

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Finance a la shmoop. who invest in stocks? and that's not like horton

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hearing who . the answer everyone. almost everyone. fancy-pants

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corporate CEOs, yoga teachers, schoolteachers ,teenagers who mowed the [kid sits in a big chair and smiles]

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lawn for a summer and are already dreaming of owning a home someday.

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yep well the fancy-pants corporate CEOs can likely put more money into stocks, but

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for most normal people even a hundred shares of whatever.com that starts at

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12 bucks and compounds at 10 percent for 20 years ends up being worth a

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meaningful sum. yeah like that. eight grand and change. it's kind of cool. so you

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can buy stocks. it's not hard it won't hurt. much. yeah. stick good ones in water.

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well logistics are simple save a grand or three go down to your local Schwab

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store or log into fidelity .com or a host of others, each raise a good one. set

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up an account and then just click to buy whatever stocks do you think you want to

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own. only you'd then just check your progress or lack thereof by going to

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Google Finance Yahoo Finance e-trade and whoever else provides legit stock price

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info for the masses. that's how most of America does it, and believe it or not [stock prices example shown]

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most of America actually owns stocks. from the whitest white shirted CEO to the

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bluest of blue collar workers. for many union workers stocks represent almost

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all of their net savings whether they realize it or not, and their stock

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ownership has produced some really perverse outcomes. take profit Co vastly

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over staffed. it had an awesome union negotiator who got the corporation's

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weak-kneed CEO to hire twice as many workers as the company actually needed.

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that over employment scenario was great for the fatten happy employees who would

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otherwise be out of work, but it was bad for the company that now had to find the

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financial resources to cut double the number of paychecks. as a result company

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earned 50 cents a share instead of the dollar they would have earned if they

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had right-sized the labor force. but typical union worker in the

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factory had essentially all of her wealth tied up in this company. well as

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part of her pension plan she had been forced to buy the company's stock. about

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five thousand dollars worth of stock every year for decades. well the company

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moved on and grind it away and did reasonably ,well she suddenly found

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herself nearing retirement with a hundred thousand shares in the company [woman nears finish line with a banner called "retirement" above it]

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whose stock was trading at five bucks a share or about ten times earnings. right

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in time and $5 right? well. that's half a million dollars of savings

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fully invested in one stock. our own company .lots of risk owning just one

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stock see our video on diversity if you want to argue. but all that money was

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invested in a stock that pretty much everyone thinks is undervalued and

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underappreciated by Wall Street so it trades at a very low multiple of

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earnings .that's at ten times things. well why only ten times? because the CEO was a

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pushover. well lunatics ran the asylum and now the

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lunatics are suffering under a very low stock price. and many need cash from

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sales of that stock for retirement. you know winnebago home buying and high

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stakes antiquing and golf and stuff. so along comes a new CEO. Tuffy MacTuff who

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wants to fire two-thirds of the union workers and close right-size the company

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deploying robots at the same time. well if Tuffy has his way the company will

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earn $1 a share this year unlikely $2 a share in two years, you know since he

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fixed the bad low profit margin structure of the company by getting rid

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of all those employees .Wall Street he knows will love this and they'll bid up [chart showing stock prices rise]

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the stock. so strangely but logically Peggy in accounting cheers when she is

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actually fired by Tuffy. why? well all her wealth a hundred thousand shares of

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stock she owned has now been bid up big-time shares go from trading at ten

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times earnings of 50 cents to trading at 20 times earnings of the projected $2 a

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share their going to earn in a couple of years or $40 a share and it's a huge

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wealth swing. she went from looking at retiring

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in Prius style on a half a million bucks to shopping for a hot new 23 year old pool

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boy named Bjorn with her 4 million dollars in stock wealth. and it can be

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the same story for Martha the tennis instructor or Barry, the pastry chef or

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Samantha the bed pan maker. to move those things. well their stories might not

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follow the same trajectory but as long as you own shares of a stock you have

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the potential to reap major rewards and suffer major losses. you know so that [people of different occupations line up]

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you've to have a chance to retire in an early age from bed pan making yeah. we

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want to do that.

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