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Market Investing
recommended books by Warren Buffett and Jim Cramer

Reduce Fear - Get Educated, Read the Books:
Investing in the stock market is a fearful concept to many people. This is simply because most people do not understand how it works. It is frightening to watch the news every day and see headlines about the Market like, "The Dow plummeted 130 points today..." On the other hand it is exciting to see "The Dow went up 130 points today." If you do not understand what these numbers mean just being exposed to the headlines can create a financially emotional roller coaster. The purpose of this page is to help clarify the market, and reduce the fear of investing.

Consult a Broker - Check the links on the left of this page:
There are many things to invest in once you open your broker account. You will want to research and consult the brokers before making any purchases or transactions. Once you find the types of securities and/or funds you like, you can setup the account to automatically withdraw a specific amount from your checking account each month and invest automatically into the securities and/or funds. You can also, manage the account manually and make the purchases when it is conveniant for you. However, if you follow the concepts of the "Automatic Millionaire" (The Automatic Millionaire : A Powerful One-Step Plan to Live and Finish Rich) you will want to automate the process. Again, consult with your broker for help setting this up.

Major Components of the Market:
Exchanges - stocks trade on three primary exchanges (NYSE, Nasdaq, and AMEX)

• New York Stock Exchange (NYSE) is based in New York City and trades a lot of the large cap and blue chip stocks you can tell the stocks based on the # of letters in the symbol - 1, 2, or 3 letter symbols (i.e. T for AT&T, KO for Coca Cola, or HOG for Harley Davidson)
• Nasdaq (QQQQ) - This is a totally automated exchange trading "Over the Counter" stocks. You can identify these stocks by the 4 character stock names (i.e. GOOG for Google, GRMN for Garmin)
• American Stock Exchange (AMEX) - This exchange typically trades the small cap or low cost stocks. You can find these under the AMEX section of the Wall Street Journal or Financial Section in your local newspaper.

Indicators or Indeces - There are three primary indicators (S&P 500, Dow Jones Industrial, and Nasdaq)

• S&P 500 (SPY) - this is an indicator for the Standard and Poors top 500 stocks. This is used as and indicator for the OVERALL maket
• Dow Jones Industrial (DIA) - used to measure 30 industry stocks picked by Dow Jones. Also an indicator of OVERALL market
• Nasdaq (QQQQ) - measures the stocks traded on the Nasdaq Exchange. Good indicator of Technology Stocks

Industries and Sectors - These are categories that the stocks fall under. Examples are Transportation, Utilities, Financials, Technology, Consumer Goods/Staples, etc.

Stocks:
When you purchase a stock you obtain a partial ownership of the company. So even if you own one stock, however low the percentage of your ownership you still have a small portion of the assets and earnings. The average investor purchases "Common Stock," where the other type is known as "Preferred Stock."

For more info on Stocks click here to go to Investopedia.com.

ETFs: (Exchange Traded Fund)
These funds allow you as an investor to buy into a group of stocks. This goup could be a specific Sector, Industry, or Market Indicator. For example you could buy an ETF for energy which would give you a group of energy stocks. You could also buy a "Water" ETF which would give you a group of stocks from companies involved with bottled water. If you just wanted to invest in the Dow Jones or S&P you can purchase the "DIA" or "SPY" ETFs and be invested in a piece of each of the companies in these major market indicators.

Note: The advantage to investing in ETF's is that you are spread across multiple companies, so if one company goes down, your ETF can stay up. On the other hand if the particular Sector, Industry, or the entire Market is going down, the depending on which ETF you have it will also go down.

For more info on ETFs click here to go to Investopedia.com

Bonds:
As an investor you can either purchase government or corporate bonds. Some popular government bonds are I-bonds and EE-bonds. Regardless of which type of bond you get, this investment gives you fixed interest rates for a return on your investment. These are great conservative investments and can also be used as income generating investments after retirement or after reaching your savings/investment goals.

For more info on Bonds click here to go to Investopedia.com

Mutual Funds:
Although mutual funds are typically used in retirement funds, you can also utilize these to get a well diversified portfolio of stocks, bonds, and other investments without having to manage it yourself. There are various levels of risk associated with different types of funds so you can choose one based on your risk comfort level. You can search thousands of funds from the recommended online brokers listed at the top left of this page. Know that the disadvantage to index/mutual funds is that they are not as liquidable as Stocks or ETFs. There may also be fees associated with mutual funds for entering and withdrawing as well as penalties for early withdrawals. Again, consult your broker before making purchases to confirm fees, penalties, and any other costs that may be affiliated with these funds.

For more info on Mutual and Index funds
Click here to go to Investopedia.com