3 -- Part 1: Investment Information and Securities Transactions
Most commentators expected strong demand for the social networking company's shares.
Just a few days before the IPO, Facebook raised the offer price for its shares to $38.
Many experts predicted that Facebook's share price would go up when it became available for trading in the secondary market.
Many investors wondered if the Facebook IPO would signal a return to the dot-com bubble of the late 1990s, when IPOs of Internet-related companies often rose 100% or more on the first trading day.
If Facebook shares began trading well above the $38 offer price, the risk of paying a high price for Facebook stock would be very high.
The internet as an investment tool was recommended by some advisors.
The investor will buy the stock at or below a specific price if he submits a limit order.
The price of the major types and sources of investment market is higher than the price specified in the limit information.
A limit order protects an investor from overspending.
On its first day of trading, Facebook stock rose to $45 and bond market averages and indexes fell.
The stock had fallen to $38.23 by the afternoon and the role of the stockbrokers had fallen below 40.
The services they provide include selection of a broker, opening investors who place market orders to buy shares that an account, and transaction basics.
Depending on the price specified in the order, those who placed limit orders may have done better.
In this chapter, you'll learn about the basic types of orders, online transac about the many sources of information that can guide your tions, transaction costs, and the legal aspects of investor investment decisions, and you'll see how different methods of protection are used.
When investors wanted to buy or sell securities, they used to call their full-service stockbrokers.
The bro kers charged relatively high commissions for processing customers' orders, but they also had access to a lot of information that was either very expensive or impossible for individual investors to acquire.
The fees that customers paid were used to compensate their brokers for providing access to information and research.
It provides access to tools that were previously restricted to professionals, and it offers an extremely low-cost means for executing trades.
You can find and process a lot of securities with these tools.
The information includes real-time stock prices, securities analysts' research reports, and techniques for investment analysis.
Online investing saves time and money.
You can quickly sort through vast databases to determine appropriate investments, make securities transactions to acquire your investments, and monitor the progress of your investments without leaving your computer.
There are a wide range of options for conducting investment research in this section.
The vast amount of investment information can be intimidating.
The good news is that you can use this chapter to begin to work through the maze of information and become a more informed investor.
It is a good place to start.
By mastering the basic concepts presented by these sites, you will be better prepared to identify the types of information that you will need to improve your investment decision-making skills.
There are many online classes to educate the novice investor.
Even experienced investors can find sites that expand their knowledge.
There are a few sites that feature investing basics.
Based on your answers, the online quiz will categorize your readiness for trading.
The investment simulation allows the user to "test drive" online trading.
The site gives access to quotes and charts, portfolio tracking software, research, news and commentary, and an extensive glossary of investment-related terms.
You can begin to develop financial plans and set investment goals once you are familiar with investing basics.
Tools that were only used by investment advisors are now free.
You can find stock quotes and port folio trackers at the sites of larger brokerage firms, as well as at general financial sites.
You can set up a personal calendar that will alert you when one of your stocks hits a price target, and you can also receive notifications when earnings announcements are made.
You can find answers to your financial planning and investing questions with online calculators.
You can use them to determine how much to save each month for a particular goal, such as the down payment for your first home, a col lege education for your children, or a comfortable retirement at age 65.
Fidelity has a number of planning tools, including college planning, retirement planning, and research tools.
The Financial Industry Regulatory Authority is a great place to find a financial calculator.
It has many tools that allow investors to perform tasks such as evaluating mutual funds, determining how much money to save for college expenses or retirement, or calculating the monthly pay ment on a loan.
If you click the Loan Calculator link, the site will ask you to submit a loan amount, an interest rate, and a term for the loan, and then you can find the monthly loan payment.
With screening tools, you can quickly sort through huge databases of stocks, bonds, and mutual funds to find those that have specific characteristics.
You can pick stocks based on their price-to-earnings ratios, market caps, revenue growth rates, debt-to-equity ratios, and many other characteristics.
You can create screens based on the bond issuer's industry as well as the bond's maturity date or yield.
You can identify mutual funds based on the required minimum investment, industry or sector, or the fees that a fund investor must pay.
One tool will give a list of securities that meet your investment criteria if you specify the type of stock or fund, performance criteria, cost parameters, or other characteristics.
Different screening tools use different ways to sort.
You can do more research on individual stocks, bonds, or mutual funds to find out which ones meet your investment objectives.
Some of the best tools on the website are provided by the company.
The opening page of the "Stock Screener" shows some of the ways you can sort stocks based on their characteristics.
If you wanted to identify a set of very large, dividend-paying companies, you could use the "Market Cap" item to select only those companies with a market cap greater than $100 billion.
There are a lot of tools and calculators that you can use to solve investment problems.
All rights belong to the person.
The Financial Industry Regulatory Authority is a trademark.
A stock screener that allows you to select stocks based on dozens of characteristics and includes a graphic interface that shows the distribution of each characteristic across all of the stocks in the database is one of the features offered by Google.
You can search by entering numerical values for the characteristics you're looking for.
Screening tools for stocks, mutual funds, and bonds are offered by Finance.
The performance of securities can be plotted from a single day to a decade or longer.
You can compare one company's price performance to that of other companies, industries, sectors, or market indexes over almost any time period by creating charts.
Every investment website has stock quotations and portfolio- tracking tools.
The price can be entered in real time or delayed several minutes.
Every time you check, M03_SMAR3988_13_GE_C03.indd is there.
You can link to more detailed information about each stock, and many sites allow you to set up multiple portfolios.
The features, quality, and ease of use of stock and portfolio trackers vary, so check several to find the one that works for you.
Portfolio trackers are easy to set up and modify.
The Internet is an investing tool.
The ease of point-and-click investing may cause investors to trade too often.
Many novice investors take the plunge before they understand the risks and rewards of investing, sometimes with disastrous results, because of the stories of others who have made lots of money.
The rules for smart investing are the same whether you trade online or through a broker.
Do your homework to make sure you understand the risks of investing.
It is likely that an investment is too good to be true.
Don't accept someone else's word that a security is a good buy, do your own research.
Use the skills you develop as you work through this text to perform your own analysis.
Higher total transac tion costs are caused by more frequent trades.
The average online transaction fee is higher.
It will take more time to recover your costs if you trade frequently.
The harder it is to beat the market, the group of individual investors who switched that the more often they trade.
On short-term trades of less than one year, you'll pay taxes on online.
These investors did very gains rate because of the higher income tax rates.
Don't believe everything you read.
It's easy to be impressed with a screen switch to online trading, they full of data about a stock's prospects or to act on a hot tip you read on traded more often and more a discussion board.
Ask aggressively, generating much higher transactions costs in yourself, what do I know about the person who is suggesting this process?
When conducting your research, stick to the sites of major after going online dropped by brokerage firms, mutual funds, academic institutions, and well-known roughly 5% per year.
Guidelines for online transactions will be discussed in the next section of the chapter, as well as the subject of online investment fraud and scam.
Discuss the impact of the internet on the individual investor.
There are four main types of online investment tools.
In Chapter 1 you learned how to become a successful investor.
You can search for the right investments to implement your investment plan once you have done that.
If you use the Internet or print sources, you should look at different kinds of investment information to come up with expectations of the risk and return behaviors of possible investments.
Key types and sources of investment information are described in this section.
Investment information can be either descriptive or analytical.
As of April 15, 2015, McDonald's had a market cap of $92 billion, revenues of $27 billion, and net income available to common stockholders of $4.76 billion.
McDonald's stock has a less than average beta of 0.76, which is less than the average stock's.
In this text, we will discuss how to develop and use market risk as a measure of risk, but until then, it is nice to know that financial websites provide security risks online.
Some forms of investment information are free.
You can find free information on the Internet, in news papers, magazines, and at public, university, and brokerage firm libraries.
You can subscribe to free and paid services that provide reports about the investment outlook and recommend actions.
Many websites now offer free e-mail.
Stock quotes, portfolio tracking, current business news, and other information about stocks of interest to you can be sent to you via e-mail if you set up your own personalized home page at many financial websites.
Premium content, such as research reports, can be found on other sites.
It's worth paying for services that will save you time and money by gathering and processing relevant investment information for you, even though free information is more plentiful than ever before.
If you pay $40 for information that increases your return by $27, it won't be economically sound.
Information purchases are usually applicable to a number of investments if you have a large investment portfolio.
M03_SMAR3988_13_GE_C03.indd-110 13 May 2016 is a description of the company's financial statements as well as the stock's price performance.
Investment information can be divided into five different types.
It is possible to assess the environment in which decisions are made.
Such information is used by investors to assess the outlook for a company.
It's most relevant to stock, bond, or options investments because of its company orientation.
Statistics on the recent price behavior of the security accompany these quotations.
This information tends to be educational or analytical.
The discussion in this section focuses on the most common online and traditional sources of information on economic and current events, industries and companies, and prices, as well as other online sources.
There are many sources of investment information available to investors beyond the discussion in this section.
I want you to steer clear of the online versions because they may have limited content.
There is limited free content on its website.
Major newspa pers contain stock price quotations for major exchanges, price quotations on stocks of local interest, and a summary of the major stock market averages and indexes.
Financial news can be found in local newspapers.
Most large cities have a daily newspaper that devotes at least a few pages to financial and business news.
There are online versions of companies.
The Money section of each issue is devoted to hiring outside investor and personal financial news and to current security price quotations and sum relations.
On Mondays the "Money" section publishes an interesting graphic showing the performance of different industry groups against the S&P press releases.
The monthly economic letters of the nation's leading more media coverage when companies disclose favorable banks, such as Bank of America (based in Charlotte, North Carolina), information, and that the spin Northern Trust (Chicago), and Wells Fargo (San Francisco), provide useful created by IR firms increased the The wire services provide days when press releases economic and business news feeds to other financial institutions.
A type of hard, quantita site, Bloomberg has its own comprehensive earnings.
CNNMoney and MarketWatch are hard to spin on websites specializing in financial news.
Business periodicals have different scope.
IR firms are hired to help spread general business and economic articles.
Recom mendations are rarely offered by them.
Personal finance and investing articles can be found in these magazines.
Securities and marketplace articles are included in some financial periodicals.
Business and personal finance magazines have websites with free access to recent content.
A number of features are included.
Economic data and reports are published by a number of government agencies.
Data on important aspects of the economy are included in this document.
Indicators and data related to economic and business conditions are published monthly.
Special services are available for investors who want more insight into business and economic conditions.
Notices of new government policies, union plans and tactics, taxes, prices, wages, and so on can be found in these reports.
Information on industries and companies is of special interest to investors.
Business trends in one industry are covered by many trade magazines.
An investor will want to analyze specific companies after choosing an industry to invest in.
Information about the company can be found on company websites, as well as investor information, annual reports, filings, and financial releases.
There are several free and subscription resources in Table 3.1.
Reports and news on public and pri Varies according to companies with in-depth cov level of service erage of 43,000 of the world's top firms.
The site is one of the best for high-tech Free news.
Stock quotes, news, investment ideas, research, financials, analyst ratings, and more are free from around the web.
Moody's Investors Service and Standard & Poor's are not regulated by Regulation FD.
Firms can reveal information to members of the media without releasing it publicly.
The law states that the media has a mission to disclose information that they learn from companies, not to trade on that information as analysts might.
The rule carries injunctions and fines, but they are not considered fraud.
Financial statements for the most recent period of operation are included in the reports.
These reports are free and can be found on a company's website.
Detailed financial statements and growth rates for AT&T's different lines of business can be found elsewhere in the report.
Thanks to SEC/EDGAR (Electronic Data Gathering and Analysis Retrieval), it is now easy to find 10-K and other SEC Filings.
You can read them for free on either the SEC's website or EDGAR's Free Edgar site.
Comparative data broken down by industry and firm size is a good tool for analyzing the financial condition of compa nies.
An excerpt from AT&T's Annual Report quickly shows the investor some important information about the firm's operations over the past year.
These sources can be found in public and university libraries.
Data on specific industries and companies can be found in a variety of subscription services.
A subscriber pays a basic fee to access the ser vice's information and can also purchase premium services for greater depth or range.
The major subscription services do not make recommendations.
The majority of investors access these services through their broker or library.
The websites for most services charge for the rest.
Standard & Poor's, Bloomberg, Mergent, and Value Line are the dominant subscription services.
The most popular services of these companies are summarized in Table 3.2.
Twice weekly, with annual publicly listed securities, recent dividend announcements and payments.
Weekly Ratings and Reports include financial data, descriptions, analyses, and ratings for stocks.
A discussion of the U.S. is contained in a report.
A variety of stock screens are included.
An excellent resource for individual investors is offered by M03_SMAR3988_13_GE_C03.indd.
It is available at most libraries and provides online access to additional services.
The reports from the various subscription services and research reports from their own securities analysts are often made available to their clients.
The research reports are free for existing and prospective clients.
Securities analysts' reports can be found on the web either from a site that consolidates research from many brokerages or from another site.
Analysts' reports on companies and industries from most bro kerage and research firms are available at the leading research site.
The free bro kerage report with earnings revisions and recommendations can be used by investors to find and purchase analyst reports.
The economy or securities markets are the focus of some letters.
Investment letters are published weekly or monthly.
It is a good place to look for information on invest ment letters and those that interest you.
It is easy to find price quotes for actively traded securities.
You can locate a stock by entering its ticker symbol.
There are ticker symbols for some well-known companies.
The published news media can be used to find the prior day's security price quotations.
Real-time stock quotes can be found on the website for CNBC TV.
There are many excellent websites that give information to increase your investment knowledge and skills.
Some of the most popular financial por tals are listed in Table 3.4.
We will look at investment advisor sites later in the chapter.
Your investing home page is what these sites want to be.
Finance and Google Finance offer a full range of investing features along with their other services, or they may be investing-oriented sites.
You should check out the different strengths and features of the different ones.
If you want your start page to include the data you want, some portals offer customization options.
You may not be able to find the best of what you need at one portal if you find a site where you can manage your investments.
To find the ones that meet your needs, you'll want to explore several sites.
The features of several popular financial portals are explained in Table 3.4 summa.
Many general investment sites include bond and mutual fund information, but you can also visit sites that specialize in these investments.
Because indi viduals don't trade bonds as much as they trade stocks, there aren't as many resources for bonds for individuals.
Bond information used to be restricted to investment portfolios, but some firms are now allowing clients access to it.
Ratings lists, recent ratings changes, and information about how they determine ratings can be found on the sites of the major bond ratings agencies.
Thousands of websites provide investing information.
Includes investing and personal finance areas containing business news, market, stock quotes, mutual funds, investment research, retirement, saving and planning, credit and debt, banking and loans, and more.
Accounts can be consolidated in the portfolio tracker.
The site has educational features, research, news, and message boards.
A variety of investment strategies are covered in model portfolios.
Premium services such as the Stock Advisor monthly newsletter are free.
Simple design makes it easy to find information.
Financial news, price quotes, portfolio trackers, bill paying, personalized home page, and a directory of other major sites are included.
Financial account data from banking, credit card, brokerage, mutual fund, mileage, and other sites are collected by Yodlee.
Users can manage and interact with their accounts with one-click access.
It is easy to set up and track finances.
Bond sites are good for beginners.
Individual investors can find bond-related news, market data, and bond offerings.
You can buy Treasury securities online.
Profiles mutual funds with ratings, screening tools, portfolio analysis and manage ment, fund manager interviews, e-mail newsletters, educational sections.
Screening and analysis tools are available for a fee.
Information and analysis of mutual funds and the fund industry is offered on a free site.
Several custom metrics and data points are offered to help find the best funds and give investors tools other than past performance to choose funds.
MAXadvisor Powerfund Portfolios is available for a fee.
Only index funds are covered on the comprehensive site.
The personal fund is popular for its mutual fund cost calculator that shows the true cost of ownership.
Suggests cheaper alternatives with the same investment objectives.
The Internet makes it easy to find sites that aren't tied to specific fund companies.
Every major mutual fund family has a website.
Visitors can hear interviews or participate in chats with fund managers.
One of the most comprehensive sites is Fidelity, with educational articles, fund selection tools, fund profiles, and more.
These tools are offered by portals and brokerage sites.
Some independent mutual fund sites are worth checking out.
The Internet makes it possible for investors to sort out the complexity of global investing, from country research to foreign currency exchange.
There is a portal for international investing.
There is a lot of free daily market data, news, economic insights, research, and analysis on this site.
Euroland.com, UK-Invest.com, Latin-Focus.com, and similar sites are for other countries and regions.
J P. Morgan has a site devoted to American Depositary Receipts, one of the most popular ways for investors to invest internationally.
Technology and telecommunications news can be found in MarketWatch, as well as coverage of global markets.
You don't know much about the qualifications of the person posting the information.
The discussions on the discussion boards are monitored by the employees of the Fool.
Finance is one of the largest online, but many feel that the quality is not as good as at other sites.
The Raging Bull has links to news and discussion groups.
Silicon Investor has high-tech boards that are considered among the best.
The ease with which information is available to investors makes it easier for scam artists and others to spread false news.
Anyone can sound like an investment expert on the internet.
You may not know who the person is on the message boards.
A disgruntled former employee or a short seller could be the person who pans a stock.
The ousted former chief executive of San Diego's Avanir Pharmaceuticals posted negative remarks on stock message boards that negatively affected the firm's share price.
A court ordered him to stop posting derogatory statements about the company.
"pump-and-dump" and "get-rich-quick" are two types of online scam.
The scam artist dumps the stock at an inflated price when the false promotion pushes the stock price up.