II. Using The Financial Pages to Make Basic Investments
by Michael Wilson
Reading the Financial Pages for Dummies®
- Copyright
- About the Author
- Acknowledgements
- Publisher's Acknowledgments
- Introduction
- I. The Financial Pages
- 1. Introducing the Financial Pages
- 2. Looking at How the Financial Pages Work
- 3. Relating the Financial Pages to the Stock Market
- 3.1. Revealing What the Stock Market Is and What It Does
- 3.2. Understanding What Shares Are
- 3.3. Looking at How the Pages Report on the Stock Market
- 3.4. Understanding Market Sectors
- 3.5. Understanding Stock Market Indices
- 3.6. Looking at Market Realities
- 3.6.1. Understanding how macro factors move markets
- 3.6.1.1. Assumption 1: Strong economic growth is a good thing
- 3.6.1.2. Assumption 2: A big trade surplus is desirable
- 3.6.1.3. Assumption 3: A strong currency is desirable
- 3.6.1.4. Assumption 4: Inflation is your enemy
- 3.6.1.5. Assumption 5: Debt is generally a bad thing
- 3.6.1.6. Assumption 6: Behaving responsibly is good for your bottom line
- 3.6.2. Avoiding the madness of crowds
- 3.6.3. Understanding how the standard business cycle works
- 3.6.1. Understanding how macro factors move markets
- 3.7. Interpreting Important Stock Market Buzzwords
- 4. Using the Pages to Your Advantage
- II. Using The Financial Pages to Make Basic Investments
- 5. Investing in Shares
- 5.1. Different Shares for Different People
- 5.2. Using the Information in the Financial Pages
- 5.2.1. Reading the information correctly
- 5.2.2. Using the information to make decisions
- 5.2.3. Selling, and why it's harder than buying
- 5.2.4. Taking a closer look at price/earnings ratios
- 5.2.5. Valuing a company that doesn't have any earnings
- 5.2.6. Understanding market capitalisation
- 5.2.7. Delving into dividends
- 5.2.8. Understanding debt ratios
- 5.2.9. Getting more information about debt
- 5.3. Comparing Stocks with Cash
- 6. Investing in Bonds
- 7. Investing in Cash Investments
- 5. Investing in Shares
- III. Delving Deeper into the Financial Pages
- 8. Sharpening Your Understanding
- 9. Watching Out for the Pitfalls
- 10. Monitoring the Market's Psychology Using Charts
- IV. Using the Pages for More Advanced Investments
- 11. Going International
- 12. Delving into Derivatives
- 13. Making Money from Commodities
- 14. Investing in Funds and Trusts
- 15. Discovering Hedge Funds, Bonds, and ETFs
- V. Other Places to Go for Financial Information
- 16. Using the Alternatives
- 17. Understanding Company Accounts
- 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 Years
- 18.2. Knowing the Company's Stock Market Size
- 18.3. Knowing the Price/Earnings Ratio
- 18.4. Looking at the Dividend, and Deciding Whether Current Profits Can Cover It
- 18.5. Finding Out When the Next Dividend Payment Is Due
- 18.6. Reading the Profit and Loss Statement
- 18.7. Looking at the Balance Sheet
- 18.8. Knowing What Other Debts the Company Has
- 18.9. Looking at the Directors' Statements
- 18.10. Checking the Buzz on Online Forums
- 19. Ten Ways of Making Sure Your Asset Allocation Fits You Perfectly
- 19.1. Assessing Your Life Situation
- 19.2. Adjusting the Balance
- 19.3. Considering Whose Money You're Managing
- 19.4. Deciding Between Capital Gains and Income for Tax Purposes
- 19.5. Deciding How Long You Can Afford to Lock in Your Money if Everything Goes Wrong
- 19.6. Figuring Out Your Attitude to Debt
- 19.7. Asking Whether You Enjoy the Investment Game for Its Own Sake
- 19.8. Figuring Out Whether You're a Herd Follower or a Maverick
- 19.9. Making Sure You Know How Important This Money Is to You
- 19.10. 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 Falling
- 20.2. The Dividend Cover Is Looking Stretched
- 20.3. The Share Price Is Below Its 200-day Moving Average
- 20.4. Directors Are Selling Their Shares
- 20.5. The Sector Is Troubled, with No Obvious Upturn in Sight
- 20.6. The Company Depends Heavily on a Client Who's in Trouble
- 20.7. A Merger Approach Looks like Falling Through
- 20.8. New Reporting Regulations Have Exposed a Pensions 'Black Hole'
- 20.9. A Recent Merger Doesn't Seem to Have Produced any Useful Synergies
- 20.10. 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 Rising
- 21.2. Like-For-Like Sales Are Up Strongly
- 21.3. Brokers' Recommendations Improve
- 21.4. The Company Is about to Be Promoted into the FTSE-100
- 21.5. The Economic Cycle Is Moving to Favour Companies like Your Target
- 21.6. The Underlying Macro-environment Is Improving
- 21.7. The Share Price Has Been Unfairly Devastated
- 21.8. Predators Are Circling the Company
- 21.9. The Company Has Announced a Technical Breakthrough
- 21.10. The Company Earns Its Money in a Currency that's Set to Strengthen
- 18. Ten Things to Know about a Share
- A. Glossary
This section takes a closer look at the stock market basics that we saw in Part I, and it looks at the relative merits of stocks against cash investments. Then it explores the weird upside-down world of bonds, where everything revolves around the interest rates rather than the bond prices themselves. Finally we return to the cash investing theme with a summary of what's available and what some of the basic terminology means.
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