The Complete Idiot's Guide to Stock Investing Fast-Track

Table of contents

1. Cover
2. Title Page
3. Copyright
4. Dedication
5. Contents
6. Introduction
7. 1 The Basics
   1. What Is a Stock?
      1. Prices in Stock Markets
      2. Rights of Ownership
   2. Why Invest in Stocks?
      1. Long-Term Growth Potential
      2. Easy Buying and Selling
      3. Important Part of Investment Plan
   3. Buying the Business, Not the Stock
      1. Relating a Company’s Value to Stock Price
      2. Buying Great Companies
      3. Avoiding Greed and Fear
   4. Taking the Long View
      1. Investing for the Long Term
      2. The Market Moves in Mysterious Ways
8. 2 Establishing a Plan
   1. Investment Goals
      1. Major Financial Goals
      2. Timing of Your Goals
      3. When to Avoid Stocks
   2. Investment Strategy
      1. Investing for Growth Strategy
      2. Investing for Safety Strategy
      3. Balanced Investing Strategy
   3. Risk and Reward
      1. Understanding Risk
      2. Measuring Risk Against Reward
      3. Will I Achieve My Financial Goals?
      4. Minimize Risk—Maximize Reward
      5. Having Reasonable Expectations
   4. Types of Risk
      1. Systematic Risks
      2. Nonsystematic Risks
      3. Minimizing Risks
   5. The Traps of Trading—Your Biggest Risk
9. 3 Finding and Understanding Information
   1. Finding Information on the Internet
      1. Morningstar
      2. Yahoo! Finance
      3. Other Resource Websites
      4. Information You Should Avoid
   2. Which Numbers Are Important?
   3. How to Use a Stock Screen
      1. The Best Stock Screen
      2. Using Morningstar’s Stock Screen
10. 4 Financial Statements
    1. Company Reports (Financially) Tell All
    2. Three Main Financial Statements
    3. The Balance Sheet Must Balance
       1. Assets: What the Company Owns
       2. Liabilities: What the Company Owes
       3. Shareholders Equity: Value to Investors
    4. The Income Statement Is Home to Bottom Line
       1. Revenue Is Sales
       2. Expenses: The Cost of Doing Business
       3. Operating Income: Sales Minus Cost of Sales
       4. Net Income: The Bottom Line
    5. Statement of Cash Flows Tracks Cash In and Out
       1. Cash Flows from Operating Activities
       2. Cash Flows from Financing Activities
       3. What the Statement of Cash Flows Tells You
11. 5 Types of Stocks
    1. Growth Stocks
       1. Defining “Growth”
       2. Growth Stock Characteristics
       3. Taking a Chance on Growth Stocks
    2. Value Stocks
       1. Not Cheap Stocks
       2. Value Stock Characteristics
       3. The Value Stock Investor
       4. Long-Term Buy
    3. Core Stocks
       1. Core Stock Characteristics
       2. Safety and Stability
       3. The Cost of Safety
    4. Size Matters in Stocks
    5. Stock Sectors
       1. Defensive Sectors Defined
       2. Cyclical Sectors Defined
12. 6 Stock Price vs. Stock Value
    1. No Clear Answers on Stock Prices
    2. How Daily Stock Prices Are Set
    3. Price and Value Are Not the Same
    4. Intrinsic Value Determines Potential Success
    5. Analyzing a Company’s Economic Moat
       1. Strong History of Making Money
       2. Evaluating an Economic Moat’s Width and Depth
       3. Durability of an Economic Moat
    6. The Next Step: Analyzing the Business
    7. Using Ratios in Analysis
       1. Earnings Per Share (EPS)
       2. Price Earnings Ratio (P/E)
    8. Intrinsic Value Using Discounted Cash Flows
       1. Understanding Discounting and Future Value
       2. The Weakness of the Discounted Cash Flow Model
       3. The Strengths of the Discounted Cash Flow Model
    9. Alternative to Discounted Cash Flow Method
13. 7 When to Buy or Sell
    1. Don’t Follow the Crowd
    2. Following the Buyers
    3. Following the Sellers
    4. A Planned Approach to Buying and Selling
       1. Margin of Error
       2. Creating a Buy Plan
    5. When to Buy Different Types of Stocks
       1. When to Buy Core Stocks
       2. When to Buy Growth Stocks
       3. When to Buy Value Stocks
    6. Have a Plan to Sell Stocks
    7. Taxes and Investing
       1. Choosing to Defer Taxes
       2. Taxes and Investing in Stocks
14. 8 Building a Portfolio
    1. Understanding Asset Allocation
       1. Asset Allocation and Diversification
       2. The Importance of Asset Allocation
    2. Those Other Two Asset Classes: Fixed Income and Cash
       1. Why Include Cash?
       2. Fixed-Income Securities (Bonds)
    3. Timing Is Everything
    4. How to Build a Portfolio That Fits You
       1. Fixed-Income (Bonds) Asset Class
       2. Stocks Asset Class
       3. Diversification and Stocks
    5. Portfolio Models
       1. An Aggressive Portfolio
       2. A Moderate Portfolio
       3. A Conservative Portfolio
       4. Portfolio Lessons
15. 9 Getting Started with a Stockbroker
    1. The World of Stockbrokers
    2. Full-Service Brokers
    3. Discount Brokers
    4. Online Brokers
    5. Which Broker Type Is Right for You?
    6. Opening a Brokerage Account
       1. Full-Service Broker Accounts
       2. Discount/Online Brokers Accounts
    7. Types of Accounts
       1. Cash Accounts
       2. Margin Accounts
       3. Discretionary Accounts
    8. Stock Market Orders You Should Know
       1. Market Orders
       2. Limit Orders
       3. Stop-Loss Orders
       4. Trailing Stops
       5. Placing an Order with Your Broker
    9. How to Keep Investing Expenses Low
    10. What You Do When Things Go Badly
        1. The SEC
        2. Financial Industry Regulatory Authority (FINRA)
        3. Individual States
        4. Broker’s In-House Monitoring
16. 10 Mistakes to Avoid and Tools to Use
    1. Common Investing Mistakes and How to Avoid Them
       1. Playing Catch-Up
       2. Fall in Love with a Stock or a Company
       3. Market Timing
       4. Abandoning Your Plan When the Market Drops
       5. Rules Have Changed
    2. Some Other Investing Mistakes
17. Index
18. About the Author