Know Thyself: How Your Needs Will Steer Your Decisions

Posted on June 25, 2012 | Classroom

There are four basic aspects that compose your personal investment profile…

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Setting Up an Ongoing Investing Program

Posted on June 19, 2012 | Classroom

The first step is always the hardest. And individual investors taking their first steps in an investment program must also confront a sea of stock market uncertainty. Some plunge headlong into the market with all their savings. Others barely wet their feet before heading back to the safe shores of their money market funds. The problem, however, with these two all-or-nothing approaches is one of timing—the risk of entering the market at a high point in the market cycle.

Dollar cost averaging is simple in concept: Invest a fixed amount at equal intervals and continue to do so over a long period. The result is that more shares of a stock or mutual fund are purchased when prices are relatively low and less are purchased when prices are relatively high. This can result in lower average per share cost over time.

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Dividing Your Assets Between Stocks, Bonds and Cash

Posted on June 4, 2012 | Classroom

Step 1: Why Is the Allocation of My Assets Important?

At first glance, many investors assume that the basic asset allocation decision is easy. After all, at this level you are focusing on only three choices—stocks, bonds and cash (money market funds and short-term certificates of deposit).

While the choices are few, the way you allocate your portfolio among these three categories will have by far the greatest impact on your performance of any investment decision you make, assuming that you don’t violate the basic investment principles.

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Collecting Basic Data on a Stock

Posted on May 30, 2012 | Classroom

The Valuation Worksheet provides a systematic approach to gathering information needed for the valuations. Clearly, the information sources play a critical role in the analysis. Here, we take a closer look at sources of information and some of the problems and differences you may encounter when using them.

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FAQs about Financial Statements

Posted on April 19, 2012 | Classroom

Learn what intangibles are, how stock repurchase programs affect a company’s investment appeal and the difference between cash and pro forma earnings.

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Making Your First Investments

Posted on March 19, 2012 | Classroom

To begin a basic investment program, you need to go through the whole asset allocation process—first determining your allocation among the major asset categories and then further down among the major stock market segments. And you come up with this mix: cash, 10%; intermediate-term bonds, 10%; and stocks, 80%—with the latter split 80% in a “core” holding of large-capitalization stocks (which would be 64% of your total portfolio), 10% in the stocks of smaller firms, and 10% in international stocks (8% of your total portfolio in each).

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Putting the Numbers to Work: The Magic of Ratios

Posted on February 28, 2012 | Classroom

Financial ratio analysis relies on financial statements to study the past and develop a feel for a company’s attractiveness measured through factors such as its competitive position, financial strength, and profitability. We have selected some widely used ratios of interest to investors. The financial data used to illustrate the ratios is taken from a sample…

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Fund Statements: What to Look For

Posted on February 16, 2012 | Classroom

The various reports provided by mutual fund companies contain vital information concerning financial matters and how the fund is managed.

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Slicing Up the Stock and Bond Pies

Posted on January 23, 2012 | Classroom

At this stage in the allocation process, the goal is to try either to reduce those risks without substantially affecting overall return, or to enhance return without substantially adding to those risks—or both.

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What You Need to Know: The Nine Essential Fund Facts

Posted on January 4, 2012 | Classroom

What to Look for: Well, the example is not a sector fund concentrating in one or a few closely allied industries. The fund’s strategy is to be diversified by firm and industry—a less risky approach than sector concentration. The option of holding debt securities is no surprise, since stock funds do hold cash but rarely move significantly into bonds. But where did foreign securities come in? The trend among managers of domestic equity funds is to have and use the flexibility to invest overseas. While not operating as a global fund, significant foreign holdings of up to 25% of the portfolio are not uncommon.

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