Wall Street is a street in lower Manhattan, New York City, New York, USA. It runs east from Broadway to South Street on the East River, through the historical center of the Financial District.It is the fisrt permanent home of the New York Stock Exchange,the world’s largest stock exchange by market capitalization of ist listed companies.
Several major U.S. stock and other exchanges remain headquartered on Wall Street and in the Financial District, including the NYSE, NASDAQ, AMEX. NYMEX, NYBOT and the investment bank Deutsche Bank.
All about stocks
There are two basic types of stock: common stock and preferred stock.
A common stock is the foundation for all corporations, large or small, because it represents
Ownership of a company. As a shareholder, you become an owner “in common” with other shareholders. As result, you share the profits and losses of a firm. If the company is profitable. Shareholders of common stock benefit the most with higher dividens and capital appreciation. The downside is common shareholders have lower priority claims against the assets of a company, behind bondholders, creditors and preferred stockholders in case of bankruptcy or liquidation.
A preferred stock is more like bond than a stock. It has priority with regard to payment of dividends and claims of company assets. Like a bond, it pays dividends(fixed income) but has no ownership interest. Investors buy preferred stocks for income purposes. Some types of preferred stock can be converted to common stock. Stocks come in very shape and size. Some offer higher returns at greater risk, while others yield little but more safety. The broad range of stocks can be broken down into several categories:
1. Growth stocks This general term applies to any stock that has a good chance of growing faster than the stock market in general. Investor buy growth stocks because they expect their value to go up in the future.
2. Blue-chip stocks Blue-chips refer to those companies that have had and will continue to have good records. Those who invest in blue-chip stocks want some groth but primarily seek a safe investment.
3. Income stocks These stocks pay fairly high dividends, often providing the stockholder with a decent income. Utility companies, real estate, and chemical stocks fall into this category.+
4. Cyclical stocks Stocks in this category react sharply to turns in the business cycle. They de well in a strong economy but drop in a recession. The stock of automobile manufacturers, airlines, and steel companies can be considered cyclical stock.
5. Defensive stocks People buy defensive stock in order to protect themselves against a recession. The business cycle does not greatly affect industries such as food, beverage, and tobaco, wich people use regardless of the economy.
6. Speculative stocks As the name implies, these stocks are extremely risky investments. Investors who puschase speculative stocks hope for a spectacular profit wich usually never materializes. Some examples of speculative stocks are penny stocks and extremely high P/E stocks.
Checklist for Good Investing
- Provide your broker with writtten instructions on how to handle all details.
- Store all written documents in a safety deposit box.
- Check incoming statements for errors.
- Pay on time; otherwise, you will incur unnecesary penaties.
- Keep track of maturity dates.
- In many cases, you will have 5 days to pay for purchase.
- Spend less than you earn so that you will have money to save; be disciplined when spending your money so that you can use it when necessary.
- Make the money you saved earn more money; do not borrow on consumption.
- Investing money that has been saved(not spent on unnecessary items) will earn you more money in the long run.
- Maximize your rate return of return on investments; a difference of 1-2% can mean a lot over an extended period of time.
- Rule 72: Determines how long it will take your investment to double-Divide 72 by th interest rate to find how many years it would take(e.g.,72 divide 8% = 9 years, whereas 72 divide 12% = 6 years).
- Be aware of the risks involved when investing.
Bull & Bear Markets- Individual stock prices tend to rise in bull markets and fall in bear markets, but not always.
- Bull and bear markets follow one another.
Bull markets: Overall, stock prices are on the way up-Occur when business activity is projected to increase-Tend to last twice as long as bear markets-Usually start quietly and then rise to become "raging bulls".
Bear markets: Overall, stock prices are on they way down-Occur when business activity is decreasing-Tend to drop drastically and the level out into the beginning of another bull market.
Picking Stocks
Thy key to profitable in vesting is to pick good stocjs. In a nutshell, you begin with researching public companies that make good products, provide excellent services, and that grow in earnings.
There are three processes in picking stocks for you portofolio:
1. Identifying Stocks from public companies you are interested in.
2. Researching the companies and narrowing the list to a manageable size-not more than ten stocks at a time.
3. Selecting each of the stocks from different industries for diversification.
Researching Stocks1.Annual reports These reports contain basic information about the company's finances. You can obtain annual reports from a broker, the company or from the company's websites.
2.Form 10K This form includes more detailed data such as audited balance sheets, historical stock performance, earnings and other information.
3.Analysts' reports Many brokerages will provide financial information and advice on which companies to purchase. You can request reports from a broker.
4.Value Line Investment Survey This survey contains analyses and detailed historical data on thousands of stocks.
5.Standard & Poo's S&P's complies data on over 500 companies.
6.Moody's Investors Service Moody's keeps track of thousands of companies and hundres of stocjs.
7.Financial Newspapers Many papers such as the Wall Street Journal, Barron's, and Investor's Business Daily can help you gather information about stocks and investment markets. You can find these at libraries, newsstands or through subscription.
8.The Internet Many investing sites exist on the many sites that offer investment advice for subcribers.
Some market indexesThe Dow Jones.
Standard &Poor's Corporation.
New York Stock Exchange index.
Nasdaq.
Amex.
Russell 2000.
