Details

<p>Preface xiii</p> <p>Acknowledgments xvii</p> <p><b>Chapter 1 Building Capital 1</b></p> <p>Role of the Stock Market in Building Wealth 2</p> <p>Determining Your Financial Position 3</p> <p>Your Financial Inventory Guide 4</p> <p>Investment Margin 11</p> <p>Defining Your Goals 12</p> <p>Return Requirements 13</p> <p>Risk Profile 14</p> <p>Life Cycle and the Risk/Return mix 15</p> <p>Other Considerations 16</p> <p>Asset Classes 17</p> <p>Asset Allocation 20</p> <p>Active versus Passive Investing 22</p> <p>Diversification 23</p> <p>Dollar Cost Averaging 24</p> <p>Chapter Takeaways 31</p> <p><b>Chapter 2 How Securities Markets Function 33</b></p> <p>Role of Securities Markets 33</p> <p>The Securities Exchanges 36</p> <p>Over-the-Counter Markets 37</p> <p>NASDAQ 38</p> <p>Electronic Communication Networks 39</p> <p>Stock Quotes 39</p> <p>The Third Market 40</p> <p>Other Markets 40</p> <p>How the New York Stock Exchange Operates 41</p> <p>How the NASDAQ Operates 43</p> <p>From SOES to SuperMontage 44</p> <p>OTC Bulletin Board and Pink Sheets 45</p> <p>How the ECNs Operate 45</p> <p>Crossing Systems 46</p> <p>Electronic versus Floor Trading 46</p> <p>Preferencing 48</p> <p>Internalization 49</p> <p>Chapter Takeaways 49</p> <p><b>Chapter 3 Selecting a Broker and Trading 51</b></p> <p>Structure of a Brokerage Firm 52</p> <p>Activities of a Brokerage Firm 53</p> <p>Services Offered by All Brokers 54</p> <p>Full-Service versus Discount Brokers 55</p> <p>Online Brokers 58</p> <p>Choosing a Brokerage Firm 58</p> <p>Commissions 60</p> <p>Direct Purchase of Securities 62</p> <p>Placing Orders 63</p> <p>Odd-Lot Trading 66</p> <p>Margin 67</p> <p>Transaction Example 68</p> <p>Settlement 69</p> <p>Stock Symbols and the Ticker Tape 70</p> <p>Questions to Ask Your Broker 71</p> <p>Chapter Takeaways 73</p> <p><b>Chapter 4 Tax-Favored Investment Strategies 75</b></p> <p>Capital Gains and Dividends 75</p> <p>Traditional IRAs 77</p> <p>Roth IRAs 79</p> <p>401(k) Plans 80</p> <p>Education Savings Accounts and 529 Plans 82</p> <p>Other Pension Plans 83</p> <p>Mutual Funds and Taxes 85</p> <p>Using Tax-Advantaged Accounts 86</p> <p>Chapter Takeaways 87</p> <p><b>Chapter 5 Reading Financial Statements 89</b></p> <p>Income Statements 91</p> <p>Balance Sheet 95</p> <p>Statement of Cash Flows 99</p> <p>Making Sense of the Numbers 102</p> <p>Profitability Ratios 102</p> <p>Asset Utilization Ratios 105</p> <p>Leverage Ratios 108</p> <p>Revisiting ROE 110</p> <p>Liquidity Ratios 110</p> <p>Market Multiples 112</p> <p>Look Beyond the Numbers 114</p> <p>Read the Footnotes 115</p> <p>Can You Trust Financial Statements? 115</p> <p>Chapter Takeaways 119</p> <p><b>Chapter 6 Sources for Investment Information 121</b></p> <p>Where to Obtain Information 123</p> <p>Securities and Exchange Commission 124</p> <p>Earnings Releases and Regulation Fair Disclosure 125</p> <p>Investment Brokers and Dealers 127</p> <p>Can You Trust Brokerage House Reports? 128</p> <p>Investment Newsletters and Other Publications 129</p> <p>Corporate Reports 130</p> <p>Reading the Annual Report 130</p> <p>Government Reports 131</p> <p>Chapter Takeaways 131</p> <p><b>Chapter 7 Common Stocks and Economic Indicators 133</b></p> <p>Another Look at the Balance Sheet 133</p> <p>Why Common Shares Have Value 136</p> <p>Macroeconomic Factors 136</p> <p>Industry-Specific Factors 140</p> <p>Other Barometers 141</p> <p>Evaluating Data 141</p> <p>Chapter Takeaways 143</p> <p><b>Chapter 8 Fundamental Analysis 145</b></p> <p>Investing versus Trading 145</p> <p>Passive Investing 146</p> <p>Active Investing 147</p> <p>Business Focus 153</p> <p>Industry Outlook 154</p> <p>Company Status 155</p> <p>Major Trends 157</p> <p>Earnings History and Outlook 158</p> <p>Dividends 159</p> <p>Price-Earnings and Price-Book Ratios Revisited 161</p> <p>Discounted Cash Flow 163</p> <p>Evaluating Management 164</p> <p>Some Final Thoughts on Fundamental Analysis 165</p> <p>Chapter Takeaways 165</p> <p><b>Chapter 9 Technical Analysis 167</b></p> <p>The Value of Charts 169</p> <p>Reading Charts 171</p> <p>Dow Theory 171</p> <p>Head and Shoulders 175</p> <p>Support and Resistance Levels 176</p> <p>Trading Ranges 177</p> <p>Breakaway Gaps 178</p> <p>Importance of Volume 179</p> <p>Other Technical Indicators 182</p> <p>Time to Grow Bullish 184</p> <p>Chapter Takeaways 187</p> <p><b>Chapter 10 Fixed-Income Securities 189</b></p> <p>Bonds 189</p> <p>Understanding Bonds 190</p> <p>Understanding Bond Prices 191</p> <p>Bond Prices and Interest Rates 192</p> <p>Call Feature 194</p> <p>Credit Quality of Bonds 194</p> <p>Other Issues Concerning Bonds 196</p> <p>How to Buy Bonds 199</p> <p>Money Market Securities 200</p> <p>Preferred Stock 201</p> <p>Understanding Preferred Stock 202</p> <p>Tax Treatment 203</p> <p>Trust Preferred Securities 204</p> <p>Final Thoughts on Bonds and Preferred Stocks 204</p> <p>Chapter Takeaways 205</p> <p><b>Chapter 11 Derivatives 207</b></p> <p>Defining Derivative Instruments 207</p> <p>Futures 209</p> <p>Spot Asset 209</p> <p>The Futures Market 210</p> <p>Delivery 211</p> <p>Hedging 212</p> <p>Stock Index Futures 212</p> <p>Single-Stock Futures 214</p> <p>Options 215</p> <p>Definition of Options 216</p> <p>Options Markets 216</p> <p>Important Terms to Know 216</p> <p>Listed Options 217</p> <p>What an Option Is Worth 219</p> <p>Commissions 221</p> <p>To Sell or to Exercise 222</p> <p>Some Popular Option Strategies 222</p> <p>A Warning about Naked Option Writing 225</p> <p>Chapter Takeaways 226</p> <p><b>Chapter 12 Mutual Funds 229</b></p> <p>An Investment Company 229</p> <p>Closed-End or Open-End 230</p> <p>A Short History of the Mutual Fund Industry 232</p> <p>Categories of Mutual Funds 232</p> <p>Advantages of Mutual Funds 237</p> <p>Disadvantages of Mutual Funds 238</p> <p>Mutual Fund Expenses 239</p> <p>How to Choose a Fund 242</p> <p>Some Final Thoughts about Mutual Funds 243</p> <p>Hedge Funds 243</p> <p>Chapter Takeaways 247</p> <p><b>Chapter 13 Rules of Thumb and Key Phrases 249</b></p> <p>Final Comments 254</p> <p>Suggested Readings 255</p> <p>About the Authors 257</p> <p>Index 259</p>

<p><b>VAHAN JANJIGIAN</b> is Chief Investment Officer at Greenwich Wealth Management, LLC, a SEC registered investment advisor. He is a <i>Forbes</i> magazine columnist and Editor of the <i>Forbes Special Situation Survey</i>, widely regarded as one of the best performing investment newsletters. He previously served on the faculties of several leading universities. He is a frequent guest on popular television and radio business programs and is the author of <i>Even Buffett Isn't Perfect</i>. <p><b>STEPHEN M. HORAN</b> is the head of professional educational content for CFA Institute and specializes in private wealth management. Prior to joining CFA Institute, he was a professor of finance at St. Bonaventure University, principal of Alesco Advisors LLC, and a financial analyst and forensic economist in private practice. He is editor of <i>Private Wealth: Wealth Management in Practice</i> and the author of numerous articles in leading peer-reviewed journals. Dr. Horan is a frequent columnist in the <i>Financial Times</i>. <p><b>CHARLES TRZCINKA</b> is the James W. & Virginia E. Cozad Chair in Finance at the Kelley School of Business, Indiana University, Bloomington. Previous positions have included the faculties of SUNY Buffalo and New York University; director of the U.S. Commerce Department's MBA program in the People's Republic of China; and senior economist with the United States Securities and Exchange Commission.

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