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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Collecting Basic Data on a Stock

Posted on October 19, 2011 | Classroom

The primary source for the per share information is the firm’s annual financial reports. Corporate annual reports will include both summary and detailed financial statements, although even more detailed financial statements are available in a separate report, the 10K. Both of these reports can be requested from the company, or obtained at the SEC’s website.

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