CHAPTER 7Public Equities: Invest in the Stock Market with Confidence

Public equities are stocks or stock funds available for anyone to buy and sell on a public market, or stock exchange, such as the New York Stock Exchange (NYSE) or NASDAQ. For many readers, this may be the most important asset class covered in this book, because it plays a prominent role in most investment portfolios. Although most people have some familiarity with public equities, many of us do not fully understand the stock market, nor do we feel confident when making investment decisions.

Because there's so much to cover on this topic, we have split public equities into two chapters. In this chapter, you'll be introduced to different approaches to investing in this asset class. Some possibilities include picking individual stocks, investing through funds, or working with an advisor to establish a customized account. We'll also cover different methods you can use to diversify your stock holdings to maximize return or minimize risk. In the next chapter, we'll help you find values-aligned investments in this asset class.

The general wisdom about how to invest in the stock market has changed dramatically over the 30-plus years I have owned stock. When I started investing in the late 1980s, the recommended approach was to buy individual stocks in companies that had a widely recognized reputation for quality, reliability, and operational excellence—and hold them. My mother, who was my first investment teacher, ...

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