Table of Contents
Title Page
Copyright Page
Acknowledgements
Note to the Reader
About the Author
Introduction
Section One - Establishing a Frame of Reference
Chapter 1 - FROM “DUMB” BARTER TO INTELLIGENT AGENTS
Chapter 2 - POINT-COUNTERPOINT
Stocks
Mutual Funds
Bonds
ETFs
Options
Futures
Summary
Chapter 3 - CONFRONTING INFORMATION OVERLOAD
Investor Constraints
Investor Choices
Investor Safety
Section Two - Stocks and Equity Markets
STOCKS AND EQUITY MARKETS
Chapter 4 - VARIETIES OF STOCKS
Just What is a Security, Anyway?
Issuers and Underwriters: Why Does a Corporation Sell Stock to the Public?
Why Investors Buy Stock
Summing Up Total Return: Dividends and Capital Gains
A Letter to Our Shareholders: Annual and Quarterly Reports (and Filings)
Making Sense of Types, Classes, and Other Stock Categories: A Map of the World ...
Chapter 5 - STOCK MARKETS
The Big Board
The Incredible Growth of Trading and Capital
National Association of Securities Dealers Automated Quotation System (Nasdaq)
Technology, Dark Pools, and the Evolution of a Unified Market
Chapter 6 - THREE VIEWS OF THE NUMBERS
Fundamental Analysis
Technical Analysis
Quantitative Analysis
Chapter 7 - WHERE TO FIND INFORMATION ON STOCKS AND FINANCIAL MARKETS
A Selection of Information Sources on the Financial Markets
Chapter 8 - HOW TO BUY AND SELL STOCK
Full-Service Brokers
Discount Brokers
Financial Intermediaries
Direct Purchase
If It Sounds Too Good to Be True . . . Protecting Yourself from Stock Scams
A Note on Financial Planners
Section Three - Mutual Funds and Investment Companies
MUTUAL FUNDS AND INVESTMENT COMPANIES
Chapter 9 - A HISTORY AND OVERVIEW OF THE MUTUAL FUND BUSINESS
Open-End versus Closed-End Funds
Index Funds
Load versus No-Load Funds
Chapter 10 - ADVANTAGES OF MUTUAL FUNDS
Simplicity
Diversification
Access to New Issues
Economies of Scale
Professional Management
Indexing
Chapter 11 - DISADVANTAGES OF MUTUAL FUNDS
Impact of One-Time Charges and Recurring Fees on Fund Performance
Hidden Cost of Brokerage
Some Hidden Risks of Fund Ownership
Chapter 12 - SOURCES OF INFORMATION ON MUTUAL FUNDS
Investment Company Institute Classification of Types of Funds
Lipper Analytical Services
Forbes
Morningstar
Chapter 13 - ALTERNATIVE INVESTMENTS
Hedge Funds
Funds of Hedge Funds
Other Alternatives
Section Four - Bonds and Other Fixed-Income Securities
BONDS AND OTHER FIXED-INCOME SECURITIES
Chapter 14 - SEVEN CHARACTERISTICS OF BONDS
The Lifespan of Bonds
Interest versus Discount
Relationship of Price to Yield
Four Important Yield Measures
Credit Quality, Ratings, and Insurance
Call and Related Features
Fixed versus Floating Rates and Foreign Currencies
Chapter 15 - HOW THE OTHER $30 TRILLION IS INVESTED
Treasuries
Corporates
Mortgage-Backed Securities and Other Asset-Backed Securities
Municipals
Money Market
Summary
Section Five - Options, Futures, and Other Derivatives
OPTIONS, FUTURES, AND OTHER DERIVATIVES
Chapter 16 - OPTIONS
Exchange-Traded Options
Combination Strategies
Determining the Value of an Option
Chapter 17 - FUTURES
A Seller’s Need to Hedge . . .
Some Buyers Need to Hedge, Too
Speculation or Insurance? Maybe a Little of Both
Actuals versus Cash-Settled Contracts
Margin and Collateral
Chapter 18 - OTHER DERIVATIVES
Section Six - Summing Up Risk and Return
SUMMING UP RISK AND RETURN
Chapter 19 - HOW WELL ARE MY INVESTMENTS DOING?
The Basics of Return
Annualized Returns: Arithmetic (Simple) or Geometric (Compound)?
Time-Weighted Returns versus Money-Weighted Returns
Complicating Factors
Chapter 20 - COMING TO GRIPS WITH THE MANY DIMENSIONS OF RISK
A Definition of Investment Risk
The Relativity of Risk
What Is Market Risk?
“It Will Fluctuate”
Other Kinds of Investment Risk: From the Quantifiable to the Subjective
Balancing Risk and Return
Chapter 21 - A CRESCENDO OF CHANGE
Again, We Ask, What Is a Market?
Glossary
Index