book

Reading the Financial Pages for Dummies®

Name: Reading the Financial Pages for Dummies®
Author: Michael Wilson
ISBN: 9780470714324

by Michael Wilson

March 2009

Beginner

392 pages

10h 31m

English

For Dummies

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Copyright
About the Author
Acknowledgements
Publisher's Acknowledgments
Introduction
About This BookMore Than Just NumbersFinding the Right Strategy for YouConventions Used in This BookWhat You're Not to ReadFoolish AssumptionsHow This Book Is OrganisedPart I: The Financial PagesPart II: Using the Financial Pages to Make Basic InvestmentsPart III: Delving Deeper into the Financial PagesPart IV: Using the Pages for More Advanced InvestmentsPart V: Other Places to Go for Financial InformationPart VI: The Part of TensGlossaryIcons Used in This BookWhere to Go from Here
I. The Financial Pages
1. Introducing the Financial Pages
1.1. Getting into the Swim of It1.2. Looking at the Key Players1.2.1. Yesterday's genteel society1.2.2. Today's drones and superheroes1.2.3. Investigating investors1.2.4. Considering companies1.2.5. Finding out about financial institutions1.3. Seeking Foreign Information
2. Looking at How the Financial Pages Work
2.1. Getting the Most out of the Statistics2.1.1. Share prices in close detail2.1.2. The daily price movement2.1.3. Perusing profits2.1.4. Puzzling out the price/earnings ratio2.1.5. Considering company size (market capitalisation)2.1.6. Dividends2.2. Looking Beyond the Numbers2.2.1. What the Numbers Don't Say2.2.2. Reading between the lines
3. Relating the Financial Pages to the Stock Market
3.1. Revealing What the Stock Market Is and What It Does3.1.1. Considering the international angle3.1.2. Figuring out FTSE3.2. Understanding What Shares Are3.2.1. Grasping the basics on shares3.2.2. Getting a share of the profit3.2.3. Investigating other types of share3.3. Looking at How the Pages Report on the Stock Market3.4. Understanding Market Sectors3.4.1. Recognising the difference between growth industries and mature sectors3.4.2. Choosing the middle ground3.5. Understanding Stock Market Indices3.5.1. Seeing how indices can move shares3.5.2. Getting into the FTSE-100 index3.5.3. Finding indices3.6. Looking at Market Realities3.6.1. Understanding how macro factors move markets3.6.1.1. Assumption 1: Strong economic growth is a good thing3.6.1.2. Assumption 2: A big trade surplus is desirable3.6.1.3. Assumption 3: A strong currency is desirable3.6.1.4. Assumption 4: Inflation is your enemy3.6.1.5. Assumption 5: Debt is generally a bad thing3.6.1.6. Assumption 6: Behaving responsibly is good for your bottom line3.6.2. Avoiding the madness of crowds3.6.2.1. Seeing through the New Paradigm3.6.2.2. Making currency decisions3.6.2.3. Keeping your head3.6.3. Understanding how the standard business cycle works3.7. Interpreting Important Stock Market Buzzwords3.7.1. Sentiment3.7.2. Momentum3.7.3. Liquidity3.7.4. High beta3.7.5. Points
4. Using the Pages to Your Advantage
4.1. Choosing Your Basic Strategy4.1.1. Are you a bull or a bear?4.1.2. Common investing approaches4.1.2.1. Income investing4.1.2.2. Long-term buy-and-hold investing4.1.2.3. Value investing4.1.2.4. Day trading4.1.2.5. Contrarian investing4.1.2.6. And finally, a bit of everything4.2. Choosing Between Investment Channels4.2.1. Direct ownership4.2.2. Nominee accounts4.2.3. Trusts

II. Using The Financial Pages to Make Basic Investments
5. Investing in Shares
5.1. Different Shares for Different People5.1.1. Following tortoises and hares5.1.2. Focusing on your own risk tolerance5.2. Using the Information in the Financial Pages5.2.1. Reading the information correctly5.2.2. Using the information to make decisions5.2.3. Selling, and why it's harder than buying5.2.4. Taking a closer look at price/earnings ratios5.2.4.1. Interpreting historical price/earnings ratios5.2.4.2. Avoiding p/e traps5.2.5. Valuing a company that doesn't have any earnings5.2.6. Understanding market capitalisation5.2.7. Delving into dividends5.2.8. Understanding debt ratios5.2.8.1. Allowing for assets5.2.8.2. Accepting that debt is good5.2.8.3. Using a rights issue5.2.8.4. Disguising debts5.2.9. Getting more information about debt5.3. Comparing Stocks with Cash
6. Investing in Bonds
6.1. Getting Comfortable with Bonds6.1.1. Understanding the upside-down logic of bonds6.1.2. Knowing what makes a bond price move6.1.3. Browsing benchmarks6.1.4. Buying bonds6.2. Government Bonds6.2.1. Looking at government bonds6.2.2. Understanding bond rating systems6.2.3. What you find in the papers – and why6.2.4. Getting down to business with some quotations6.2.5. Looking at the international scene6.3. Corporate Bonds6.4. Junk Bonds: A High-Risk Alternative6.4.1. Why they call these bonds junk6.4.2. 'Sub-investment grade' paper
7. Investing in Cash Investments
7.1. Everybody Needs Some Cash7.2. The Tax Issue7.3. Talking About Time7.3.1. Running fast to stay ahead of inflation7.4. Getting Price Information7.5. Knowing Your APRs from your AERs7.5.1. Working out the APR7.5.2. Working out the AER7.6. Dodging Sneaky Bank Tricks
III. Delving Deeper into the Financial Pages
8. Sharpening Your Understanding
8.1. Understanding Statutory Announcements8.1.1. When does a company have to make a regulatory announcement?8.1.2. When a company hits the skids8.1.3. 'Responding to press comment': Emergency announcements, updates, and what to do about them8.1.4. Changes to controlling shareholdings8.1.5. The takeover rules8.2. How the Media Is Regulated8.3. Valuing a Company Correctly8.3.1. Putting a price on a company with no profits8.3.2. Appraising goodwill, patents, and other intangibles8.3.2.1. Patents8.3.2.2. Goodwill8.3.2.3. Brand names8.3.3. Weighing up takeover potential8.4. A Closer Look at Fixed Asset Valuations8.4.1. Considering depreciation8.4.2. Valuing property8.4.3. A property sector whose value simply disappears8.5. Checking Future Pension Liabilities
9. Watching Out for the Pitfalls
9.1. Avoiding Common Mistakes9.1.1. Price falls on ex-dividend dates9.1.2. Scrip issues and consolidations9.1.3. Collapsing valuations: Falling knives and the dead cat bounce9.1.4. Free float and golden shares: How they affect volatility9.1.5. EBITDA9.2. Spotting a Company's Hidden Debts9.3. Shorting – and Why It So often Ends in Tears9.3.1. 'Bear raids': Ganging up on the victim9.3.2. Getting information about shorting volumes
10. Monitoring the Market's Psychology Using Charts
10.1. Understanding What Charts Can Tell You and What They Can't10.1.1. Driving on emotions10.1.2. Viewing charts realistically10.2. Looking for Patterns10.2.1. Double tops10.2.2. Head and shoulders10.2.3. Rising floors, support levels, and resistance levels10.2.4. Triangles10.2.5. The Elliott Wave theory10.3. Using Charts to Check Your Decisions
IV. Using the Pages for More Advanced Investments
11. Going International
11.1. Why You Need Foreign Shares in Your Portfolio11.2. Riding the Macro Waves11.3. Investing in Emerging Markets11.4. Finding Information on International Investments11.4.1. Using comparison charts11.4.2. Locating information on individual companies11.4.3. Overlooking structural differences11.5. Understanding Currency Risks and Using Them to Your Advantage
12. Delving into Derivatives
12.1. Finding Out about Futures12.1.1. The perils of leverage12.1.2. Hedging with futures contracts12.1.3. Companies that hedge their own prices!12.1.4. Why you don't find many futures prices in the papers12.2. Weighing Up Warrants12.3. Casting an Eye Over Options
13. Making Money from Commodities
13.1. Introducing Commodities13.1.1. Understanding the long-term argument for minerals13.1.1.1. Describing how the cyclical process works13.1.1.2. Considering exceptions to the cyclical process13.1.2. Getting started on commodity investing13.1.3. Finding price information13.2. Investing in Oil13.2.1. Getting started13.2.2. Finding price information13.2.3. Can anyone forecast the oil price?13.2.4. Drillers, explorers, and producers13.3. Investing in Food Commodities13.3.1. The DJ-AIG commodity indices13.3.2. Finding price information13.4. Investing in Gold and Other Precious Metals13.4.1. Finding price information13.4.2. Choosing gold certificates and Exchange Traded Funds13.4.3. Investing in silver, platinum, palladium, and the rest13.4.4. Discovering gold collectable coins13.4.5. Finding prices information13.5. Investing in Less Glamorous Commodities13.5.1. Uranium13.5.2. Finding price information
14. Investing in Funds and Trusts
14.1. Employing a Professional Pilot14.1.1. Utilising expert knowledge14.1.2. Considering the autopilot advantage14.2. Sourcing Information14.2.1. TIDMs, SEDOLs, and ISINs14.2.2. Where's your manager gone?14.3. Unit Trusts14.3.1. Understanding unit trusts14.3.2. Finding unit prices14.3.3. Choosing between a business sector and a geographical sector14.3.4. Introducing UCITS and OEICs14.4. Investment Trusts14.4.1. Understanding discounts and premiums14.4.2. Finding information on the 'invisible' investment category14.4.3. Realising why investment trusts are volatile
15. Discovering Hedge Funds, Bonds, and ETFs
15.1. Assessing Hedge Funds15.1.1. Understanding why hedge funds are different15.1.2. Considering whether hedge funds are becoming respectable at last15.2. Gauging Guaranteed Income Bonds15.2.1. Understanding how 'structured products' work15.2.2. Locking up your money for a fixed period15.2.3. Taking those marketing claims with a pinch of salt15.2.4. Avoiding precipice bonds15.3. Exchange-Traded Funds15.3.1. Understanding how ETFs work15.3.2. Finding out what's available in the UK15.3.3. Buying foreign-listed ETFs
V. Other Places to Go for Financial Information
16. Using the Alternatives
16.1. Online Resources16.1.1. 'Official' websites16.1.1.1. The London Stock Exchange16.1.1.2. RNS statutory announcements16.1.2. 'Unofficial' Websites16.1.2.1. FT.com16.1.2.2. London South East16.1.2.3. Thisismoney16.1.2.4. iii16.1.2.5. Hemmington Scott16.1.2.6. Trustnet16.1.2.7. Oanda16.1.2.8. Kitco16.1.2.9. BBC16.2. Discussion Forums, and Why You Need Them16.2.1. The Motley Fool16.2.1.1. ADVFN16.2.2. Blogs16.3. Investment Magazines16.3.1. Discovering the charm of a monthly read16.3.2. Valuing independent reportage16.4. The Foreign Press16.5. Reports, Tipsheets, and Newsletters16.5.1. Analysing brokers' analyst reports16.5.2. Assessing tipsheets and newsletters
17. Understanding Company Accounts
17.1. Introducing Company Accounts17.1.1. Getting hold of the accounts17.1.2. Working out how much you really need to know17.2. Reading a Profit and Loss Account17.3. Understanding the Balance Sheet17.4. Interpreting the Cash Flow Statement17.5. Understanding What Can Go Wrong17.6. Looking at Five-year Summaries
VI. The Part of Tens
18. Ten Things to Know about a Share
18.1. Knowing What the Share Price Has Done During the Last Five Years18.2. Knowing the Company's Stock Market Size18.3. Knowing the Price/Earnings Ratio18.4. Looking at the Dividend, and Deciding Whether Current Profits Can Cover It18.5. Finding Out When the Next Dividend Payment Is Due18.6. Reading the Profit and Loss Statement18.7. Looking at the Balance Sheet18.8. Knowing What Other Debts the Company Has18.9. Looking at the Directors' Statements18.10. Checking the Buzz on Online Forums
19. Ten Ways of Making Sure Your Asset Allocation Fits You Perfectly
19.1. Assessing Your Life Situation19.2. Adjusting the Balance19.3. Considering Whose Money You're Managing19.4. Deciding Between Capital Gains and Income for Tax Purposes19.5. Deciding How Long You Can Afford to Lock in Your Money if Everything Goes Wrong19.6. Figuring Out Your Attitude to Debt19.7. Asking Whether You Enjoy the Investment Game for Its Own Sake19.8. Figuring Out Whether You're a Herd Follower or a Maverick19.9. Making Sure You Know How Important This Money Is to You19.10. Asking Whether You Can Get Over a Mistake
20. Ten Warning Signs that a Company May Be on the Ropes
20.1. Profits Are Stagnant or Falling20.2. The Dividend Cover Is Looking Stretched20.3. The Share Price Is Below Its 200-day Moving Average20.4. Directors Are Selling Their Shares20.5. The Sector Is Troubled, with No Obvious Upturn in Sight20.6. The Company Depends Heavily on a Client Who's in Trouble20.7. A Merger Approach Looks like Falling Through20.8. New Reporting Regulations Have Exposed a Pensions 'Black Hole'20.9. A Recent Merger Doesn't Seem to Have Produced any Useful Synergies20.10. The Auditors Have Qualified the Company's Accounts
21. Ten Red-Hot Clues to an Opportunity
21.1. The Price/Earnings Ratio Is Below the Sector Average, but Rising21.2. Like-For-Like Sales Are Up Strongly21.3. Brokers' Recommendations Improve21.4. The Company Is about to Be Promoted into the FTSE-10021.5. The Economic Cycle Is Moving to Favour Companies like Your Target21.6. The Underlying Macro-environment Is Improving21.7. The Share Price Has Been Unfairly Devastated21.8. Predators Are Circling the Company21.9. The Company Has Announced a Technical Breakthrough21.10. The Company Earns Its Money in a Currency that's Set to Strengthen
A. Glossary

Overview

The financial pages are a minefield of jargon and impenetrable terminology - they are also your key to having a true understanding of how the financial markets work, and taking full control of your investments. This plain-English guide to the financial pages demystifies the tables, charts and analysis, so you can keep on top of the latest developments in the City and have confidence that you are maximising your investment returns.

Reading the Financial Pages For Dummies includes:

The Financial Pages

What the Financial Pages Are
How the Financial Pages Work
How the Financial Pages Relate to the Stock Market
How You Can Use the Pages to Work for You

Using the Financial Pages to Make Basic Investments

Investing in Shares
Investing in Bonds
Investing in Cash Investments

Delving Deeper Into the Financial Pages

Sharpening Your Understanding
Watching Out For the Pitfalls
Using Charts To Monitor The Market’s Psychology

Using the Pages for More Advanced Investments

Going International
Delving into Derivatives
Making Money from Commodities
Investing in Trusts and Funds
Discovering More Ways to Use Managed Funds

Other Places to Go for Financial Information

Using the Alternatives
Company Accounts

Part of Tens

Ten Things to Know About a Share
Ten Ways to Get Your Asset Allocation Right
Ten Warning Signs that a Company Might be on the Ropes
Ten Red-Hot Clues to an Opportunity

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