Note to the Reader.
About the Author.
Introduction: Becoming a Savvy Investor.
Section I Establishing a Frame of Reference.
Chapter One From “Dumb” Barter to Intelligent Agents.
Chapter Two Point-Counterpoint.
Chapter Three Confronting Information Overload.
Section II Stocks and Equity Markets.
Chapter Four 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 of Stock.
Chapter Five 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 Six Three Views of the Numbers.
Chapter Seven Where to Find Information on Stocks and Financial Markets.
A Selection of Information Sources on the Financial Markets.
Chapter Eight How to Buy and Sell Stock.
If It Sounds Too Good to Be True . . . Protecting Yourself from Stock Scams.
A Note on Financial Planners.
Section III Mutual Funds and Investment Companies.
Chapter Nine A History and Overview of the Mutual Fund Business.
Open-End versus Closed-End Funds.
Load versus No-Load Funds.
Chapter Ten Advantages of Mutual Funds.
Access to New Issues.
Economies of Scale.
Chapter Eleven 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 Twelve Sources of Information on Mutual Funds.
Investment Company Institute Classification of Types of Funds.
Lipper Analytical Services.
Chapter Thirteen Alternative Investments.
Funds of Hedge Funds.
Section IV Bonds and Other Fixed-Income Securities.
Chapter Fourteen 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 Fifteen How the Other $30 Trillion Is Invested.
Mortgage-Backed Securities and Other Asset-Backed Securities.
Section V Options, Futures, and Other Derivatives.
Chapter Sixteen Options.
Determining the Value of an Option.
Chapter Seventeen 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 Eighteen Other Derivatives.
Section VI Summing Up Risk and Return.
Chapter Nineteen How Well Are My Investments Doing?
The Basics of Return.
Annualized Returns: Arithmetic (Simple) or Geometric (Compound)?
Time-Weighted Returns versus Money-Weighted Returns.
Chapter Twenty 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 Twenty-One A Crescendo of Change.
Again, We Ask, What Is a Market?