Synopses & Reviews
While the stock market has had its fair share of ups and downs in recent years, investors and traders have still continued to find profitable opportunities.
Getting Started in Stock Investing & Trading, Illustrated Edition will prepare you to do the same. Filled with a wide array of ideas, strategies, and market realities, this reliable resource will help you determine which investing and trading ideas may work best for you and put you in a better position to honestly identify your appropriate risk tolerance level.
Engaging and informative, Getting Started in Stock Investing & Trading, Illustrated Edition truly lives up to its name by bringing the key concepts of this topic to life through attractive illustrations, charts, and graphs. Along the way, it carefully weaves these visual components with definitions, examples, key points, and links to websites that will further expand your knowledge base. Divided into two comprehensive parts, Getting Started in Stock Investing & Trading, Illustrated Edition:
- Discusses how to develop an investing program to build your portfolio based on the principles of Fundamental Analysis in Part I and focuses on specific trading skills and techniques based on the principles of Technical Analysis in Part II
- Includes new chapters that describe the nature of stock investing and trading, discusses dividend strategies, and explores signals and confirmation of price movement
- Features illustrated comic strip panels at the conclusion of each chapter, which highlight major points and provide an entertaining, but informative running narrative throughout the book
- Reveals how investors and traders can earn profits regardless of the current state of the market by building a flexible and defensive portfolio.
There is no "quick fix" to becoming a better investor or "secret formula" to gaining a trading edge. Paid services, the Internet, and financial planners may all offer you an abundance of market insights, but in the end, it comes down to each individual learning for themselves what works and what doesn't. Getting Started in Stock Investing & Trading, Illustrated Edition can help you achieve this goal.
Synopsis
A new illustrated guide to stocks of the bestselling Getting Started seriesThis popular and easy-to-use guide to understanding and investing in stocks combines basic and non-technical explanations with many other features: illustrations, definitions in context, examples, charts, key points, and valuable resources including online supplemental learning tools.
- Offers simple and carefully developed building blocks for understanding how to invest in stocks
- Includes a wealth of visuals that walk you step-by-step through the investing process
- Also available in an illustrated e-book format
With great attention to detail, author Michael Thomsett ensures that Getting Started in Stock Investing and Trading is both highly informative and visually pleasing.
About the Author
MICHAEL C. THOMSETT has written more than seventy books on investing, real estate, business, and management. He is the author of several Wiley books, including the bestselling Getting Started in Options, as well as Getting Started in Fundamental Analysis, Getting Started in Real Estate Investing, and Getting Started in Swing Trading. He contributes articles to many websites, including Minyanville Media and TradingMarkets.com as well as investor-oriented magazines such as BetterInvesting and the AAII Journal.
Table of Contents
Acknowledgments viii
Element Key ix
Introduction xi
PART 1 INVESTING
CHAPTER 1 THE NATURE OF STOCK INVESTING 3
Favorable Conditions for Owning Stocks 4
Relationships between Price and Fundamental Value 5
CHAPTER 2 INVESTMENT RISKS 17
Market Risk 18
Leverage Risk 20
Knowledge and Experience Risk 22
Sector Risk 25
Political and Economic Risk 26
Inflation Risk and Tax Risk 27
Fundamental Risk 30
Lost Opportunity Risk 32
CHAPTER 3 VALUE INVESTMENT AND GROWTH INVESTMENT 37
Value Investing and Control 41
Value Investing Myths and Facts 43
CHAPTER 4 MARKET STRATEGIES 53
A Basic Strategy: Buy and Hold 54
A Strategic Requirement: Diversifi cation 55
Other Market Strategies 63
Ex-Dividend Date Buying 66
CHAPTER 5 FUNDAMENTAL ANALYSIS 71
The Balance Sheet 75
The Income Statement 77
The P/E Ratio: Finding a Bargain-Priced Stock 78
Revenue and Earnings: Fundamentals Based on the Operating Statement 83
Working Capital: Fundamentals as a Form of Money Management 86
CHAPTER 6 DIVIDEND STRATEGIES 93
Dividend Yield as a Means for Stock Selection 93
Calculating Dividend Yield 94
Reinvesting Dividends 97
When Dividends Are Earned and Paid 98
Picking Stocks for Dividends 101
CHAPTER 7 ALTERNATIVES: STOCKS OR MUTUAL FUNDS 107
Investment Clubs 108
Types of Mutual Funds 110
Mutual Fund Fees 112
Classification by Features 115
Other Conduit Investments 117
Variable Annuities 119
PART 2 TRADING
CHAPTER 8 THE NATURE OF STOCK TRADING 127
Favorable Conditions for Trading Stocks 132
Relationships between Technical and Fundamental Value 137
CHAPTER 9 TRADING RISKS 143
Market Risk and Volatility Risk 145
Leverage Risk 149
Short Position Risk 152
Extreme Reaction Risk 153
Technical Knowledge and Experience Risk 156
Technical Risk and Market Culture 157
CHAPTER 10 TRADING METHODS: DAY AND SWING TRADING 165
Day Trading 166
Swing Trading 172
Exit and Entry Signals 175
CHAPTER 11 CHARTING TOOLS AND INTERPRETATION 185
Traditional Types of Charts 186
Candlestick Charts: The Basics 189
Combining Candlesticks with Western Technical Analysis 198
CHAPTER 12 ESSENTIAL TECHNICAL INDICATORS 203
Support and Resistance: The Trading Range as a Defining Attribute of Price 204
Popular Price Patterns and Their Meaning 212
Trend Lines for Spotting Reversals 217
Breakouts and Gaps 219
Moving Averages, Oscillators, and Volume Tests 222
CHAPTER 13 SIGNALS AND CONFIRMATION 229
Swing Trade Reversals 231
Candlestick Reversals 234
Signal Failure 241
CHAPTER 14 TECHNICAL ANALYSIS, DOW THEORY, AND PRACTICE 247
The Efficient Market 248
The Random Walk 251
Charles Dow and His Market Theory 257
Glossary 265
Recommended Reading 289
About the Author 291
Index 293