A fully revised edition of the
INVESTING CLASSIC
For over 30 years this comprehensive, easy-to-read guide has served well as the
definitive reference for successful investing. Now in its fifth edition and completely
updated, Understanding Wall Street helps investors prosper in today’s challenging
economy—whether you’re just beginning or among the millions soon to retire.
Understanding Wall Street, Fifth Edition, has new sections and information on the
issues most important to today’s investors, including:
- How to use the Internet as an investing tool
- The shift to exchange traded funds (ETFs)
- The link between Wall Street and Main Street
- The Risks and rewards of the global economy
Table of Contents
Preface ix
1 What Is a Share of Stock? 1
How a company is organized
The meaning of profits and dividends
How stock prices are determined
2 Wall Street-How It Works 15
A pictorial and narrative description of Wall Street's colorful history
The role of the investment banker
An explanation of listed and over-the-counter trading
3 Analyzing Your Company 37
How to identify the best companies and interpret their financial statements
Using the reinvestment rate
Calculating financial ratios
Other highlights of security analysis
4 Reading the Financial Pages 57
The history and calculations of the Dow /ones Averages
How to read the stock tables, earnings reports, stock split announcements, and other
important news items
5 Investing and Trading 81
Finding a stockbroker or investment advisor
Opening a brokerage account
Setting investment objectives
Understanding the margin account
How to make money in a bear market
Investment clubs
Exchange traded funds (ETFs)
6 Growth Stocks 117
The meaning of "the growth stock theory" of investing
How companies grow
Identifying growth companies
A guide on how much to pay for growth stocks
7 Manias, Fads, and Panics 143
Recognizing investment bubbles
Examples and the pitfalls of emotional investing
The stock market crashes of 1929 and 1987
The recent dot-com bubble
8 From Wall Street to Main Street 167
The Great Real Estate Bubble
A new investment landscape
Government versus business
Greed and atrocities
Bankruptcies and"bailouts"
9 Bonds, Preferred Stocks, and the Money Market 185
An explanation of bonds and the bond tables
Calculating "yield to maturity"
Investing inconvertible bonds
Tax advantages of municipal bonds
Understanding the Federal Reserve
The use of T-bills and other money market instruments
10 The Internet 211
The background of this fast-growing medium
How today's investors are using the World Wide Web
11 Global Investing 223
The emerging global market
The Japanese stock market
The markets in London, Germany, France, and elsewhere
ADRs
Participating through mutual funds
12 Gold and Silver 239
Learning from the past
Gold and silver as a store of value
Supply and demand, production, and stockpiles
The investment opportunities and risks
A few equities
13 The Principles of Technical Analysis 255
Methods for improving market timing
Constructing bar charts and point & figure charts
How to read charts
The WST Ratio and other reliable technical indicators
14 Stock Options and Other Derivatives 287
How to use "put" and "call" options
The two dimensions of a premium
Valuing option premiums
Index options
Simple explanations of various option strategies
Other derivatives explained, including interest rate swaps and credit default swaps
15 Personalities of Wall Street 325
Key players during the early days of Wall Street
Tycoons and stock traders
Great investors
The "movers and shakers" of today
Sources 339
A dictionary of Wall Street
Useful business publications
Investment services
Appendix 353
Historical annual statistics for the Dow Industrials and Consumer Price Index (CPI)
Illustration Credits 357
Index 359
320 pages, Paperback