- You already told us that you are 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?
- [Jim] 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.
- [Kay] Now how about you?
Did you personally own any shares in the company?
- [Jim] 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% in just a couple of months.
- Yeah thanks for bringing that up.
Owning individuals stocks can be a nerve racking 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 a 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.