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New to the

Stock Market

Danish Shareholdes Association

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Claus W. Silfverberg

• MBA• 25 years experience with shares • Entrepreneur• DAF director since 1995• WFIC Managing director

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• The only non-profit organization defending the interests of private Danish shareholders

• Educates private investors• Promotes the shareholder culture in Denmark• A purchasing organization – discounts for members• Knowledge Sharing Forum• 15.300 private members and 47 company

members

What is the Danish Shareholders Association?

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• Representative board of 36 people

• Executive board of 6 people• Secretariat with 5 people • 14 local councils• Young Shareholders

Organization

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Agenda for the evening:

• Why invest in shares?

• How to select a share?

• How to build a portfolio?

• How are shares traded?

• How to establish a personal investment strategy

• How to progress as individual investor

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Meet Thorleif

Engineer

- Works with soil pollution

Father of 3 children

36 years old

Interested in investment in shares

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Meet Thorleif

Bought shares in The Sjælsø Group in January 2005

The Sjælsø Group is a real estate development company, which among other things builds apartments in Copenhagen

The price was 601 kr. pr. share

Bought for 100.000 kr.

About shares About bonds

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Yield

The Sjælsø Group

Meet Thorleif

September the 30th 2005 can the shares be sold for 1.550 kr. pr. share.

He has earned 151.840 kr.

From that is deducted the cost of 500 kr.

He ends up with a 151000 kr. profit in 9 months.

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He was just lucky…

It might as well have gone the other way…

He is someone who uses a lot of time on shares, I cannot do that.

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Why does Thorleif invest in shares?

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Because he knows something about shares?

He knows that shares give a much higher yield than a deposit in the bank or a purchase of bonds.

The share value from 1970 – 2005

Anual average yieldShares 11,5%Interest 6,0%

S&P 500

What 100 kr. has become

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He knows not to make short term investments in shares.

Short term loss

Short term win

Long term win

Because he knows something about shares?

Novo Nordisk

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He knows not just to invest in just one share – but in several shares.

Because he knows something about shares?

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He knows it is dangerous to invest for borrowed money. You can easily lose all your money.

100.000 kr.

200.000 kr. + 200.000 kr. borrowed

Because he knows something about shares?

0 kr.

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So . . .

Shares give a much higher yield than a bank deposit or bonds

It is dangerous to invest for borrowed money

Don’t make investments in a single share – buy different shares

Don’t make short term investments in shares

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Do you know Boris?

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He makes impulse purchases

He reads it the papers that it is going well for a company – and buys their shares.

He is putting all his eggs in one basket

Do you know Boris?

He is lending a lot of money when he sees a chance

He is buying and selling shares all the time

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Boris wants to buy shares right now…

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…but is attracted by the wrong ones…

Neurosearch dropped 47 pct. August 11th.

Should shares be gambling?

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Neurosearch

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90% 10%

Long term, profitable

pension savings

GamblingRationel investement

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How do we become the top 10%

investors ?

To sum up – Meet Thorleif

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What does Thorleif do?

65.000 shares

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Where should his focus be?

All 170 shares at Copenhagen Stock

Exchange

20 largest shares at Copenhagen Stock Exchange

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Kurslisten

Let us take a look at an example

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Let us take a look at an example

Price graph

Key numbers

Company data

Account

As a member of DAF can you get updated stock guide pages at our website www.shareholders.dk

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Is it a good share?

Is the share expensive?

Let us take a look at an example

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Is it a good share?

Is the share expensive?

Has the turnover been increasing?

Has the net result been positive and progressing?

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2

Let us take a look at an example

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Is the development in turnover positive?

1

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Is the development in the net result positive?

2

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Is it a good share?

Is the share expensive?

Is the share too expensive compared to its profit?

Is the share too expensive compared to the company’s value?

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2

Let us take a look at an example

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Is the share too expensive compared to its profit?

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Price/Earning should not be high compared to the normal cost and should not exceed 25.

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Is the share too expensive compared to its profit?

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Price/Earning (P/E) – a key number

P/E is calculated as:

P/E tells ”the price for one kr. profit”.

P/E should be as low as possible – then is the share ”cheap”.

Rule of thumb:

Never buy a share with P/E over 25

Market priceNet result

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Is the share too expensive compared to its profit?

1

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Is the share too expensive compared to its profit?

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P/E can be used at a future profit

Source: Dagbladet Børsen

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Is the share too expensive compared to the company’s value?

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Price/Internal value – P/I – should not be considerably more than it normally is.

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It takes about 10 minutes to identify a good and reasonably priced share

What does Thorleif do?

Share analysis Knowledge of shares

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Group task

Should we buy the shares that have been handed out?

Evaluate the shares as shown:

- Is it a good share?

(Positive development in turnover and net result)

- Is the share expencive?

(Calculate P/E. Is it high compared to what it normally is?)

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Thorleif puts together a portfolio of shares– a collection of shares – to reduce the risk.

The portfolio should include at least 7 – 10 shares

What does Thorleif do?

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As a member of DSA you can follow his portfolio at www.shareholders.dk.

Thorleif’s portfolio

AktieKøbs status Antal

Kurs status

Købs værdi Status 30/9

Ændring Året %

Sjælsø Gruppen 601 160 1.550 96.160 248.000 157,9%Vestas 68 1500 150 102.000 225.000 120,6%DSV 371 270 660 100.170 178.200 77,9%A.P. Møller A 44900 2 63.400 89.800 126.800 41,2%H. Lundbeck 122 800 157 97.600 125.600 28,7%Coloplast 300,5 300 378 90.150 113.400 25,8%Jeudan 385 250 479 96.250 119.750 24,4%William D. H. 257 400 291 102.800 116.400 13,2%Danske Bank 173,2 600 190 103.920 114.000 9,7%Novo Nordisk 305,6 300 307 91.680 92.100 0,5%

Kontant 28.015Kurtage 1.455I alt kr. 970.530 1.485.810I alt % 48,6%KFX % 29,2%

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Novo Coloplast APM

Coloplast Danske Bank DSV

APM

Danske BankNovo

2001

2002

Novo APM DSV

2003

2004

2005

2006

Spreading over time – continuous investment

Spreading over different industries and companies.

Spreading the purchases over time will give a good, average purchasing price.

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Using my own timePay an

investment manager about 2% p.a.

The stock markets answer to charter tourism – you buy a complete package and get a ticket for the ride.

Mutual Funds

Alternatives

Investeringsbeviser

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A mutual fund example

See www.morningstar.dk, www.ifr.dk, and www.cse.dk and the wesites for the individual mutual funds.

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Select carefully when you buy a mutual fund certificates

Mutual Funds

Never invest in the ones with 1 or 2 stars

Kilde: www.morningstar.dk

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Own administration of shares: 8% p.a.

Mutual funds: 6% p.a.

Boris

Time

Your yield

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How do you build a good portfolio?

Summary

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How do I trade stocks?

Personal enquiery to your banker/ stockbroker

Online via the Internet

IdenticalRisk if broker goes bankrupt

LowHighRisk for making mistakes

Less goodGoodAdvanced options for trading

YesNoAnalysis

YesNoCounselling

HighLowBrokerage

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How do I trade shares?

Over the counter

Trading at average price

Trading at the stock exchange

• You trade with the bank’s own reserve

• You know the price• The purchasing price is the same as

at the stock exchange• Settling is instantly

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How do I trade stocks?

Over the counter

Trading at average price

Trading at the stock exchange

• You tade with the bank’s own reserve to the average price for the day’s trades.

• The price is calculated at 15.30 and at 17.00 o’clock.

• You only know the price after the tradings at the stock exchange has ended.

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How do I trade stocks?

Over the counter

Trading ataverage price

Trading at thestock exchange

• The trade is directly at the stock exchange

• You set your highest purchase price and lowest sell price

• Trade if oppositely directed bids/offers

• Partial trades

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Order book for Novo Nordisk

Source: www.cse.dk

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Strategy Psychology Stock taxes

Strategy

”As long as you don’t follow a strategy,are you just a happy amateur”

• Write your strategy down – and follow it

• With a strategy you optimize your yield

– and allow yourself a good nights sleep

• With a good strategy you can avoid the worst

blunders

• Remember to look at your yield after taxes

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DAF makes it possible for you to earn more on shares

Administration of own shares: 8% p.a.

Mutual fund:

6% p.a.

Time

Your yield

30 years

Investment at 40.000 kr. pr. year

1,6 mioDAFDAF membership +

2 hours a month

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• Membeship magazine ”Aktionæren”• Electronic newsletter• The Stock Handbook – also online• Website – www.shareholders.dk• Stock lectures• Stock dictionary• Stock analysis program• Membership meetings• Stock saving clubs• Discounts

What does DSA offer?

Offers

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• New to the stock market• Investing in growth shares• DSA’s basic investment class’• Special class’

– Understand the accounts with DSA’s stock handbook– Analyse a stock with DSA’s stock analysis program– Find the winning stocks with technical analysis– Stock taxes– - more

What does DSA offer?

Stocklectures

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• Membership forum when you can get knowledge to use in your own portefolio

• Can be organized in a PLC.• Capital can be 200.000• About 15 investors• Make strategy for investments• Regelar meetings• Portfolio in shares

What does DSA offer?

Knowledge Sharing Fora – Stock saving clubs

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• Ordinary membership: kr. 375 • Youth membeship: kr. 250

Join at www.shareholders.dkTel. 45821591

What does a membership cost?

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Become a member of the

Danish Shareholders Association

How should I move on?

DSA’s Stock lectures teach you to invest wisely

DSA’s website (www.shareholders.dk) og

’Aktionæren’ gives you the information you need!

DSA’s membership discounts gives you advantages!