High Level Investing for Dummies

✍ Scribed by Mladjenovic, Paul

• Publisher: For Dummies
• Year: 2015
• Tongue: English
• Leaves: 387
• Series: For Dummies
• Category: Library

✦ Synopsis

Enhance your investment portfolio and take your investments to the next level! Do you have an investment portfolio set up, but want to take your knowledge of investing a step further? "High-Level Investing For Dummies" is the resource you need to achieve a more advanced understanding of investment strategies--and to maximize your portfolio's profits. Build upon your current knowledge of investment, particularly with regard to the stock market, in order to reach a higher level of understanding and ability when manipulating your assets on the market. This approachable resource pinpoints key pitfalls to avoid and explains how to time your investments in a way that maximizes your profits.

Investing can be intimidating--but it can also be fun! By building upon your basic understanding of investment strategies you can take your portfolio to the next level, both in terms of the diversity of your investments and the profits that they bring in. Who doesn't want that? Up your investment game with proven strategies that help increase profits and minimize risks Avoid common pitfalls of stock speculating to make your investment strategy more impactful Understand how to time the market to maximize returns and improve your portfolio's performance Uncover hidden opportunities in niche markets that can bring welcome diversity to your portfolio

"High-Level Investing For Dummies" is the perfect follow-up to "Stock Investing For Dummies," and is a wonderful resource that guides you through the process of beefing up your portfolio and bringing home a higher level of profits!

✦ Table of Contents

Title Page......Page 3
Copyright Page......Page 4
Table of Contents......Page 7
About This Book......Page 17
Foolish Assumptions......Page 18
Where to Go from Here......Page 19
Part I Getting Started with High‐Level Investing......Page 21
Chapter 1 Taking Stock before You Invest at a Higher Level......Page 23
Defining stock......Page 24
Checking out market capitalization......Page 25
Investigating the Dual Nature of Stock Investing......Page 26
Choosing Stocks Wisely......Page 27
Measuring Stock Performance with Indexes......Page 28
Going beyond Stocks: Exchange‐Traded Funds and Options......Page 29
Taking Tips and Techniques from Great Investors......Page 30
Delving into Different Kinds of Risk......Page 31
Risks to the value of your holdings......Page 32
Political risks......Page 35
Risks to your earnings......Page 36
Individual risks......Page 38
Hedging......Page 40
Getting in the Swing of Things: Volatility......Page 41
Discovering why volatility is greater now......Page 42
Tracking volatility......Page 43
Understanding Diversification and Allocation......Page 45
Cyclical or defensive: Preparing for different economies......Page 46
The mix‐up: Avoiding perfect correlation......Page 47
Allocating according to your personal situation and goals......Page 48
Digging into Stock Sectors......Page 49
Conglomerates......Page 50
Financial......Page 51
Industrial goods......Page 52
Utilities......Page 53
Time frame issues......Page 54
Personal goals......Page 55
Your risk tolerance......Page 56
Recognizing the Principles of Fundamental Analysis......Page 59
Examining the product and the marketplace......Page 60
Being a contrarian......Page 61
Being patient and diligent......Page 62
The balance sheet......Page 63
Checking the Numbers......Page 64
Sales......Page 65
Debt......Page 66
The price‐to‐earnings (P/E) ratio......Page 67
The price‐to‐book ratio......Page 69
Finding Undervalued Stocks......Page 70
Trying out stock screening tools......Page 71
Digging into the SEC’s EDGAR database......Page 72
Figuring out how dividends work......Page 73
Investigating the dividend payout ratio......Page 75
Reinvesting your dividends......Page 76
Before You Begin: Finding and Picking a Broker......Page 77
Cash accounts......Page 78
Options accounts......Page 79
Looking at Brokerage Orders......Page 80
Event‐ or condition‐related orders......Page 81
Time‐related orders......Page 84
Combination orders......Page 85
Other orders......Page 86
Understanding the good and the bad of margin......Page 87
Knowing the best times to use margin......Page 89
Applying some tips for using margin......Page 91
Walking through a margin example......Page 92
Looking at the Major Markets......Page 95
Bonds......Page 96
Currency......Page 98
Commodities......Page 99
Credit and interest rates......Page 100
Taking a Peek at Intermarket Analysis Charts......Page 101
Negative correlation......Page 102
Positive correlation......Page 103
No correlation......Page 104
Shining a Spotlight on Major Marketplaces......Page 106
Europe......Page 107
China......Page 108
Other marketplaces......Page 109
Part II Choosing High‐Potential Stocks and Exchange‐ Traded Funds......Page 111
Understanding Who Can Benefit from Small‐Cap Stocks and Why......Page 113
Micro‐cap stocks (including penny stocks)......Page 115
Standard small‐cap stocks......Page 117
What are the product and the market?......Page 118
Who are the company’s partners?......Page 119
What have been the company’s turnaround opportunities?......Page 120
Thinly traded markets......Page 121
Heavy‐promotion stocks......Page 122
Trying Out Tactics and Principles for Small‐Cap Success......Page 123
Finding Small‐Cap Gems......Page 125
Understanding Some Important Points about Shorting......Page 127
Getting a Handle on the Mechanics of Shorting......Page 128
Opening a margin account......Page 130
Making the trade......Page 131
Having your exit strategy in place......Page 132
Trying not to get squeezed......Page 133
Closing out your short trade......Page 134
Using fundamental analysis to choose “what”......Page 135
Using technical analysis to choose “when”......Page 137
Protecting yourself......Page 139
Chapter 9 Exchange‐Traded Funds for Big Up Moves......Page 141
Comparing ETFs to stocks......Page 142
Stacking up ETFs against mutual funds......Page 143
Picking Out the Pros and Cons of ETFs......Page 145
The benefits......Page 146
The downsides......Page 147
Checking Out the Main Categories of ETFs......Page 148
Index ETFs......Page 149
Sector ETFs......Page 150
Commodity ETFs......Page 152
International ETFs......Page 153
Bond ETFs......Page 154
Leveraged ETFs......Page 155
Using ETFs for Income......Page 157
Chapter 10 Exchange-Traded Funds for Big Down Moves......Page 159
Defining Inverse ETFs......Page 160
Exploring How Inverse ETFs Work......Page 161
Comparing Inverse ETFs to Other Bearish Strategies......Page 162
Deploying a put option......Page 163
Using an inverse ETF (ta-da!)......Page 164
Hedging......Page 165
Looking at the Next Level of Inverse ETFs......Page 166
Part III All about Options......Page 169
Chapter 11 Introducing Options......Page 171
Defining Options: Calls and Puts......Page 172
Checking Out Reasons to Consider Options......Page 173
Understanding the contract multiplier......Page 174
Considering the underlying assets......Page 175
Distinguishing between money positions......Page 176
Walking through a Call Option Example......Page 177
The option from the buyer’s perspective......Page 178
The option from the writer’s perspective......Page 180
Placing Option Orders......Page 181
Reading an Options Table......Page 183
The Nuts ’n’ Bolts of Option Combinations......Page 184
Considering your outlook......Page 185
Looking at the legs......Page 186
Weighing risk versus return......Page 187
Talking about time and moneyness......Page 188
Trying Out Option Tutorials and Resources......Page 189
The Uses of Call Options......Page 191
Using call options for gains......Page 192
Writing covered call options for income......Page 194
The Golden Rules for Call Option Buyers......Page 195
The Golden Rules for Covered Call Option Writers......Page 197
Buying Put Options for Gains......Page 199
Profiting when the market is “too high”......Page 200
Understanding the golden rules for put option buyers......Page 201
Cash‐secured puts......Page 203
Considering Put Options for Protection......Page 204
Chapter 14 Bullish Combination Strategies......Page 207
The Bull Call Spread......Page 208
The stock enters the range of the strike prices before expiration......Page 209
The stock goes over the higher strike price before expiration......Page 210
The stock moves sideways......Page 211
The stock goes down......Page 212
The Synthetic Long......Page 213
The stock price falls......Page 214
The stock goes up......Page 215
The Bear Put Spread......Page 217
The stock goes sideways or stays flat......Page 218
The stock’s price goes into the legs’ price range before expiration......Page 219
The stock goes under the second leg’s strike price......Page 220
The stock moves sideways......Page 221
The stock crashes......Page 222
The Zero‐Cost Collar......Page 223
The stock goes up......Page 224
The stock goes down......Page 225
Pondering Neutral Points......Page 227
Noting the underlying asset’s volatility with the beta rating......Page 228
Taking a Chance on High Volatility......Page 229
The long straddle......Page 230
The long strangle......Page 232
Seeking Income with Low Volatility......Page 234
The short straddle......Page 235
The short strangle......Page 237
Part IV Strategies from the Greats......Page 239
Chapter 17 Legendary Investing Strategies......Page 241
Considering Characteristics of the Great Investors......Page 242
Spotlighting Specific Investors and Their Tactics......Page 243
Warren Buffett: Buying businesses in a market of stocks......Page 244
John Templeton: Buying at points of maximum pessimism......Page 245
Peter Lynch: Investing in what you understand......Page 247
Harry Browne: Preparing for any economy......Page 248
Other pros to check out......Page 249
Tracking and Analyzing the Pros......Page 250
Chapter 18 High‐Octane Speculating......Page 251
Jesse Livermore......Page 252
John Paulson......Page 254
George Soros......Page 255
Other greats......Page 256
Discovering undervalued diamonds in the rough......Page 259
Finding and shorting the overvalued......Page 260
Chapter 19 Big Picture, Big Profits......Page 261
Gross domestic product......Page 262
Leading economic indicators......Page 263
Unemployment......Page 264
Money supply, inflation, and deflation......Page 265
Telling a bubble from a bull market......Page 268
Taking away lessons from past bubbles......Page 269
Recognizing today’s potential bubbles......Page 272
Making Sense of Megatrends......Page 274
Tools, News, and Views That You Can Use......Page 275
Understanding the big picture......Page 276
Chapter 20 Corporate and Political Skullduggery......Page 279
Knowing when to take notice of the insiders......Page 280
Getting the scoop from the SEC......Page 281
The upside of insider buying......Page 283
The lowdown on insider selling......Page 284
Researching Political Insider Trading......Page 286
Chapter 21 Technical Analysis......Page 289
Looking at key elements: Price and volume......Page 290
Using charts: Tools of the trade......Page 291
Comparing Technical Analysis and Fundamental Analysis......Page 293
Tracking Trends......Page 295
Trend direction......Page 296
Trendlines......Page 297
Channels, resistance, and support......Page 298
Checking Out Chart Patterns......Page 299
Reverse head and shoulders......Page 300
Cup and handle......Page 301
Double tops and double bottoms......Page 302
Flags and pennants......Page 303
Investigating Indicators......Page 304
The Relative Strength Index......Page 305
Moving averages......Page 306
Moving average convergence/divergence......Page 307
Bollinger Bands......Page 308
Digging into Resources for Technical Analysis......Page 309
Part V The Part of Tens......Page 311
Use Stop‐Loss Orders......Page 313
Go against the Grain......Page 314
Hold Cash Reserves......Page 315
Sell and Switch......Page 316
Consider the Zero‐Cost Collar......Page 317
Try Selling Puts......Page 318
Prepare Your Exit Strategy......Page 319
Exercise Patience......Page 321
Try Trailing Stops......Page 322
Use Stock Triggers......Page 323
Look at Leveraged ETFs......Page 324
Buy Call Options......Page 325
Sell Put Options......Page 326
Construct a Synthetic Long......Page 327
Measuring Twice......Page 329
Showing Courage......Page 330
Doing the Opposite of What’s Expected......Page 331
Specializing in a Sector......Page 332
Having Discipline......Page 333
Regularly Monitoring Your Holdings......Page 334
Accepting Mistakes Early......Page 335
Part VI Appendixes......Page 337
Investing Websites......Page 339
Financial commentary sites......Page 340
Magazines and newspapers......Page 341
Stock investing books......Page 342
Other investing books......Page 343
Investment/financial advisors......Page 345
Brokerage research......Page 346
Brokerage firms......Page 347
Government Agencies......Page 348
Stock screening tools......Page 349
Exchange‐traded fund (ETF) resources......Page 350
Economics, trends, and the big picture......Page 351
Technical analysis resources......Page 352
Appendix B: Financial Ratios......Page 353
Return on equity (ROE)......Page 354
Return on assets (ROA)......Page 355
Common Size Ratios......Page 356
Liquidity Ratios......Page 357
Quick ratio......Page 358
Debt‐to‐asset ratio......Page 359
Working capital......Page 360
Price‐to‐earnings ratio (P/E)......Page 361
Price‐to‐book (P/B) ratio......Page 362
Price‐to‐sales (P/S) ratio......Page 363
Dividend payout ratio......Page 364
Index......Page 367
EULA......Page 387