Everything an individual investor needs to know about stocks. All About Stocks covers stock market basics for newcomers, and also provides concise and understandable answers to today's most-asked stock market questions. Entirely rewritten from the first edition--with diagrams, charts, and tables added to increase its usefulness and "curb appeal"--this second edition now includes: using the Internet for both information and trading; how mutual funds can ease stock market anxieties; how to buy a stock--and know when it's time to sell.
PREFACE
This new edition of
All About Stocks is updated and
introduces many changes and improvements over the first edition. The
Internet and the growth of index mutual funds have had significant
ramifications for the stock market, and they have changed the way
individual investors invest in stocks. Not only do investors have more
information, but through the Internet, they are able to buy and sell
stocks without talking to anyone. Among the many changes to this book is
the information necessary to use the Internet, for investors who are
willing to take charge of their own portfolios. Stock prices and stock
markets are constantly changing. There are stocks that have increased in
value by several hundred percent in very short periods of time, and at
the other extreme, stocks that have faded into oblivion. Moreover, the
stock market has achieved new highs over the past four years (1995 to
1999) with annual returns of over 30 percent for many of the blue-chip
stocks. This is an aberration, and in future years it will not be so
easy for investors to earn these abnormally large returns. When the
market becomes more broad-based to include small and mid-cap stocks,
returns will revert to their normal average range of 7 to 10 percent,
and investors will have to be more discriminating in their choices of
investments, in order to earn positive returns.
Investing in the stock market can have a substantial effect on your
financial well-being. This book is written to provide a practical guide
for existing and potential stock investors. By understanding the basics
of investing, the economic and financial conditions of companies, and
the nature of stock markets, investors will be better able to assess
investment opportunities. Investing your own money in stocks is
difficult for most investors, particularly beginning investors, but by
knowing what to expect, investors will be able to use strategies to
manage their portfolios more effectively.
There are many myths concerning investing in the stock market, and this
book does not fall into the category of offering methods to get rich
quickly. In fact, many sophisticated investors in the stock market know
just how difficult it is to outperform market averages consistently over
long periods of time. Investors should also be aware that suggested
methods or techniques of beating the stock market may not live up to
their expectations.
The first chapter begins with a discussion of the fundamentals of
investing, what stocks are, the different types of stocks, and the
advantages of investing in them.
The second chapter compares the risks and returns of stocks with other
financial investments. Within the context of the risk-return tradeoff,
the selection of investments is introduced.
The third chapter includes an overview of the economic influences that
have a bearing on the valuation of stocks. Understanding the
relationships between the economy and the stock and bond markets is of
great significance for stock investors. The latter part of the chapter
includes tables on how to read the stock quotations listed in financial
newspapers and the electronic media.
The fourth chapter discusses how and where securities are traded,
including the Internet. The first part of the chapter has an overview of
the types of brokerage firms and what to look for in the selection of a
broker. This is followed by a discussion of both the costs and mechanics
of trading stocks.
