(eBook PDF) finance understanding stocks mcgraw hill 2004

Wall Street Three Major Stock Exchanges... Professional TradersProfessional traders How Wall Street Keeps Score The Dow Jones Industrial Average... Mutual Funds: A Popular Alternative to

The Stock Market Course

A Beginner’s Guide to Short-Term Trading Reminiscences of a Stock Operator

How to Read this Book

3

What Is a Share of Stock?

stock livestock.

You Buy Stocks for Only One Reason: To Make Money

capital gains, capital loss.

New York: Where Stock Investing Became Popular

Wall Street

Three Major Stock Exchanges

Joining a Stock Exchange

Corporations: Convincing People to Buy Their Stock

Individual Investors

Investors

Short-Term Traders

short-term traders

day trader,

Professional Traders

Professional traders

How Wall Street Keeps Score

The Dow Jones Industrial Average

sectors

Other Indexes

Wall Street Journal

It’s All About Points

How Much Is It Going to Cost?

How Much Did You Make?

What If No One Wants to Buy or Sell Your Stock?

specialist,

ket maker.

mar-Why Stocks Are a Good Idea

Stocks for the Long Run

Inflation

Risk: The Chance You Take When You Buy Stocks

The Dow 30 (including ticket symbol)

19

maturity date

Treasuries, munis, corporate.

yield

principal

Mutual Funds: A Popular Alternative

to Individual Stocks and Bonds

mutual funds.

diversification.

Why People Choose Mutual Funds

Net Asset Value

no-load load.

Index Funds: A Popular Alternative to Actively Managed Mutual Funds

Index funds

certificate of deposit

money market fund,

commercial paper.

Investing in Real Estate and Real Estate Investment Trusts (REITs)

B u l l , B e a r, a n d S i d e wa y s M a rk e t s

Bear Market

Bull Market

Sideways Market

29

Classifying Stocks: Income, Value, and Growth

Value stocks

intrinsic value.

P/E ratios

Growth Stocks

Dividends: Another Way to Make Money

boiler rooms.

Boiler Room

book value

T h e S E C : P ro t e c t i n g I nve s t o r s

ag a i n s t Fra u d

37

risk tolerance

Asset Allocation: Deciding How Much Money

to Allot to Each Investment

How Chart Patterns Could Have Saved Your Portfolio

Volume

10

17.50 17.25 17.00 16.75 16.50

25 20 15 10 5 0

©Big Charts.com

Figure 11-12 Double top

head fakes

Volume

T 10 11 12 1 2 3 4 F 10 11 12 1 2 3 4

45.60 45.55 45.45 45.40 45.35 45.30 45.25 45.20

45.05 45.10 45.15

45.00 44.00 44.95 44.90 44.85

1 0.8 0.6 0.4 0.2 0

©Big Charts.com

Figure 11-13 Double bottom

1,200 1,400

1,000 3.5 3 2.5 2

0

1.5 1 0.5

©Big Charts.com

Figure 11-14 Nasdaq head and shoulders

The breakaway gap.

The continuation gap.

IBM Hourly

Volume

F 11 1 3 H11 1 3 T11 1 3 H11 1 3 F11 1 3 H11 1 3 T 11 1 3 H11 1 3 T 11 1 3 F11 1 3

89.5 89.0 88.5 88.0 87.5 87.0 86.5 86.0 85.5 85.0 84.5 84.0 83.5 83.0 82.5

81.0 81.5 82.0

2.5 2.0 1.5 1.0 0.5

Problems with Technical Analysis

B i og ra p hy o f Je s s e L i ve r m o re

Reminiscences

of a Stock Operator,

131

Advanced Technical Indicators and Oscillators

cal indicators and oscillators,

techni-Moving Averages: Simple but Powerful Tools

moving average

CAT Daily SMA (50) SMA (200)

Volume

56 58 60

54

50 52

36 38 40 42 44 46 48

32 34

10 8 6 4

0 2

On-Balance Volume (OBV): A Measure of Volume

47 48

43 44 45 46

41 42

20

10 0

–20 –10

Relative Strength Indicator: A Measure of Whether Stocks

Are Overbought or Oversold

oscillator

relative strength relative weakness,

overbought oversold.

Realative Strength Index (14)

60 58 56 54 52 50 48 46

36 38

44 42 40

34 32

100 80

CAT Daily Bollinger Bands (20) 12/06/02

64 62 60 58 56 54 52 50 48 46 44 42

38 40

36 34 32

10 8 6 4 2 0

Figure 12-4 Bollinger bands

S p e c u l a t i n g o n C o m m o d i t i e s a n d

F u t u re s C o n t ra c t s *

101 Investment Lessons by the Wizards of Wall Street

141

Psychological Indicators

The Chicago Board Options Exchange Volatility Index

20 22

18

©Big Charts.com

Figure 13-1 VIX

Mutual Fund Redemptions

Investor’s Business Daily

Capitulation

Capitulation

The Pump and Dump

Insider Trading

149

The Federal Reserve System: A Government Group You Can’t Ignore

150

The Dollar: I’m Falling and I Can’t Get Up

152

Conquer the Crash

Politics: The Government Influences the Stock Market

154

O t h e r R e a s o n s S t o c k s

G o U p o r D ow n

157

Mistake #1: You Don’t Sell Your Losing Stocks

not

Investor’s Business Daily,

158

Mistake #2: You Let Your Winning

Stocks Turn into Losers

Mistake #3: You Get Too Emotional about Your Stock Picks

160

Dow 36,000 Dow 100,000

The Shawshank Redemption,

Mistake #4: You Bet All Your Money

on Only One or Two Stocks

The Exceptions

162

Mistake #5: You Are Unable to Be Both

Disciplined and Flexible

Mistake #6: You Don’t Learn from Your Mistakes

Mistake #7: You Listen to or Get Tips from the Wrong People

164

Mistake #8: You Follow the Crowd

can

Mistake #9: You Aren’t Prepared for the Worst

Move more of your money into cash.

166

Listen to Traders, Not Investors

Keep a Lot of Cash

Psychology Makes the Market Go Round

172

Don’t Trust Earnings Estimates

Use Both Technical and Fundamental Analysis

Losing (a Little) Money Can Be Educational

It forces you to analyze what you did wrong.

It tests your character.

It forces you to be disciplined.

174

It forces you to take action.

Get Your Finances in Order

Buying and Holding Isn’t for Everyone

The Market Doesn’t Always Go Up

your

176

The Markets Are Not Fair to Individual Investors

Take on the Street: What Wall Street and Corporate ica Don’t Want You to Know

Amer-The Ultimate Safe Money Guide

Not Everyone Should Invest in Individual Stocks

And Yet There Are Exceptions

178

A Trading Strategy That Works

How the Strategy Works

arbitrage Money

How I Trade for a Living

The Rules

180

What the Critics Say

Money

182

T h e G a m e s A n a l y s t s P l a y

60 Minutes

184

Conclusion

186

K n ow l e d ge : T h e G re a t e s t G i f t Yo u

C a n G i ve Yo u r L ove d O n e s

Wall Street Journal

Boiler Room

189

Index

Characteristics and Risks of

Famous Financial Fiascos

How to Make Money in Stocks

Investor’s Business Daily,

see

see

192

see

see see

See also

Take on the Street

10–K 10–Q

Value Line Investment Survey,

see

Wall Street Journal

see Wall Street Journal

196

About the Author

Michael Sincere

101 Investment Lessons from the Wizards of Wall Street

The Long-Term Day Trader

The Hours Trader

After-World News Now!