The Complete Idiot's Guide to Stock Investing Fast-Track

Overview

The Complete Idiot's Guide® to Stock Investing Fast-Track gives readers exactly what they need to know in order to confidently invest in stocks on their own. Readers won't get bogged down with non-essential information, but will instead learn the critical fundamentals for picking and valuing stocks and intelligently managing a portfolio for long-term success. Readers learn how to evaluate various classes of stocks, how to improve their chances of success based on their personal level of risk, how to make a ...

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The Complete Idiot's Guide to Stock Investing Fast-Track

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Overview

The Complete Idiot's Guide® to Stock Investing Fast-Track gives readers exactly what they need to know in order to confidently invest in stocks on their own. Readers won't get bogged down with non-essential information, but will instead learn the critical fundamentals for picking and valuing stocks and intelligently managing a portfolio for long-term success. Readers learn how to evaluate various classes of stocks, how to improve their chances of success based on their personal level of risk, how to make a purchase, when to invest, and how to minimize their risk along the way. Many investing books give readers a lot of non-essential information; The Complete Idiot's Guide® to Stock Investing Fast-Track gives readers only the essentials so they can get moving and start investing right away.

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Product Details

  • ISBN-13: 9781615642335
  • Publisher: Alpha Books
  • Publication date: 10/2/2012
  • Series: Complete Idiot's Guide Series
  • Pages: 160
  • Sales rank: 543,812
  • Product dimensions: 5.50 (w) x 8.20 (h) x 0.50 (d)

Meet the Author

Ken Little is the stock investing writer for About.com and the author of 12 books on personal finance topics including Teach Yourself Investing in 24 Easy Lessons. His relaxed and informative style helps readers understand complex financial topics in a way that removes the fear factor that often accompanies tackling complex investment topics. In addition to being a personal finance author, Ken was the chief financial writer for a large mutual fund and has been a consultant to several large financial services companies. He's also served as the business editor of a major daily newspaper and Vice President of Marketing for a large financial services company.

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Table of Contents

1 The Basics 1

What Is a Stock? 2

Prices in Stock Markets 2

Rights of Ownership 3

Why Invest in Stocks? 4

Long-Term Growth Potential 4

Easy Buying and Selling 5

Important Part of Investment Plan 6

Buying the Business, Not the Stock 6

Relating a Company's Value to Stock Price 7

Buying Great Companies 7

Avoiding Greed and Fear 8

Taking the Long View 9

Investing for the Long Term 9

The Market Moves-in Mysterious Ways 10

2 Establishing a Plan 11

Investment Goals 11

Major Financial Goals 12

Timing of Your Goals 12

When to Avoid Stocks 13

Investment Strategy 14

Investing for Growth Strategy 15

Investing for Safety Strategy 15

Balanced Investing Strategy 16

Risk and Reward 17

Understanding Risk 17

Measuring Risk Against Reward 18

Will I Achieve My Financial Goals? 19

Minimize Risk-Maximize Reward 19

Having Reasonable Expectations 20

Types of Risk 21

Systematic Risks 21

Nonsystematic Risks 22

Minimizing Risks 23

The Traps of Trading-Your Biggest Risk 24

3 Finding and Understanding Information 25

Finding Information on the Internet 26

Morningstar 26

Yahoo! Finance 27

Other Resource Websites 29

Information You Should Avoid 30

Which Numbers Are Important? 31

How to Use a Stock Screen 31

The Best Stock Screen 32

Using Morningstar's Stock Screen 33

4 Financial Statements 35

Company Reports (Financially) Tell All 36

Three Main Financial Statements 37

The Balance Sheet Must Balance 37

Assets: What the Company Owns 38

Liabilities: What the Company Owes 39

Shareholders Equity: Value to Investors 40

The Income Statement Is Home to Bottom Line 41

Revenue Is Sales 42

Expenses: The Cost of Doing Business 42

Operating Income: Sales Minus Cost of Sales 43

Net Income: The Bottom Line 43

Statement of Cash Flows Tracks Cash In and Out 44

Cash Flows from Operating Activities 45

Cash Flows from Financing Activities 46

What the Statement of Cash Flows Tells You 46

5 Types of Stocks 47

Growth Stocks 47

Defining "Growth" 48

Growth Stock Characteristics 49

Taking a Chance on Growth Stocks 50

Value Stocks 51

Not Cheap Stocks 51

Value Stock Characteristics 52

The Value Stock Investor 53

Long-Term Buy 53

Core Stocks 54

Core Stock Characteristics 54

Safety and Stability 55

The Cost of Safety 56

Size Matters in Stocks 56

Stock Sectors 57

Defensive Sectors Defined 58

Cyclical Sectors Defined 59

6 Stock Price vs. Stock Value 61

No Clear Answers on Stock Prices 62

How Daily Stock Prices Are Set 63

Price and Value Are Not the Same 63

Intrinsic Value Determines Potential Success 64

Analyzing a Company's Economic Moat 65

Strong History of Making Money 66

Evaluating an Economic Moat's Width and Depth 67

Durability of an Economic Moat 69

The Next Step: Analyzing the Business 70

Using Ratios in Analysis 70

Earnings Per Share (EPS) 71

Price Earnings Ratio (P/E) 71

Intrinsic Value Using Discounted Cash Flows 73

Understanding Discounting and Future Value 73

The Weakness of the Discounted Cash Flow Model 75

The Strengths of the Discounted Cash Flow Model 76

Alternative to Discounted Cash Flow Method 77

7 When to Buy or Sell 79

Don't Follow the Crowd 80

Following the Buyers 81

Following the Sellers 82

A Planned Approach to Buying and Selling 83

Margin of Error 83

Creating a Buy Plan 84

When to Buy Different Types of Stocks 86

When to Buy Core Stocks 86

When to Buy Growth Stocks 87

When to Buy Value Stocks 87

Have a Plan to Sell Stocks 88

Taxes and Investing 90

Choosing to Defer Taxes 90

Taxes and Investing in Stocks 91

8 Building a Portfolio 93

Understanding Asset Allocation 94

Asset Allocation and Diversification 94

The Importance of Asset Allocation 94

Those Other Two Asset Classes: Fixed Income and Cash 95

Why Include Cash? 96

Fixed-Income Securities (Bonds) 96

Timing Is Everything 98

How to Build a Portfolio That Fits You 98

Fixed-Income (Bonds) Asset Class 99

Stocks Asset Class 99

Diversification and Stocks 100

Portfolio Models 100

An Aggressive Portfolio 101

A Moderate Portfolio 103

A Conservative Portfolio 105

Portfolio Lessons 106

9 Getting Started with a Stockbroker 107

The World of Stockbrokers 108

Full-Service Brokers 108

Discount Brokers 110

Online Brokers 113

Which Broker Type Is Right for You? 114

Opening a Brokerage Account 115

Full-Service Broker Accounts 115

Discount/Online Brokers Accounts 116

Types of Accounts 116

Cash Accounts 117

Margin Accounts 117

Discretionary Accounts 118

Stock Market Orders You Should Know 118

Market Orders 119

Limit Orders 119

Stop-Loss Orders 120

Trailing Stops 120

Placing an Order with Your Broker 121

How to Keep Investing Expenses Low 122

What You Do When Things Go Badly 123

The SEC 123

Financial Industry Regulatory Authority (FINRA) 124

Individual States 124

Brokers In-House Monitoring 124

10 Mistakes to Avoid and Tools to Use 125

Common Investing Mistakes and How to Avoid Them 126

Playing Catch-Up 126

Fall in Love with a Stock or a Company 128

Market Timing 129

Abandoning Your Plan When the Market Drops 130

Rules Have Changed 132

Some Other Investing Mistakes 133

Index 135

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