Introducing securities markets

You already told us that you were on the board of directors of a publicly traded company? I was. We took the company private last year. Okay. So who chooses the directors of a publicly traded company? Typically, candidates are identified by company management and the existing board members. The final decision is made by the shareholders of the company, and they vote as to whether to approve a candidate for the board or not. So where were the shares of your company traded? We were traded on Nasdaq, the second-largest stock market in the world after the New York Stock Exchange. So did the board of directors ever discuss your company's stock price? Absolutely. Because we represented the shareholders of the company, we had a fiduciary duty to direct the company in ways that will maximize shareholder value. Now, how about you? Did you personally own any shares in the company? Yes, I did. So how did you feel as you saw the stock price fluctuate up and down? For example, I remember a few years ago your company's stock price went down 20 percent in just a couple of months. Yeah. Thanks for bringing that up. Owning individual stocks can be a nerve-wracking experience. As we discussed previously, a prudent investor follows the advice, don't put all of your eggs in one basket. So the large majority of my savings is in diversified mutual funds. Okay. So just a couple more questions. First, do you consider yourself an expert in accounting and finance? Yes, I do. Okay. So can you use your knowledge of accounting and finance to pick winning stocks in the stock market? Well, that's a good question. I'll give you a short answer. No. But understanding securities markets will make you a much more informed investor.