Financial Markets For The Rest Of Us
An Easy Guide To Money, Bonds, Futures, Stocks, Options, And Mutual Funds
This chapter has been the longest in this book. This is perhaps because stocks receive more attention than any other investment type, and why not? After all, it is because of stocks that many companies go on to do great things. So one can say that stocks have a profound impact on our financial planning, our economy, and our society. By investing in stocks not only do we hope to provide a secure future for ourselves, but we also help along the many companies who depend on the funds raised by offering stocks.
One of the recent developments in the stock market has been the news about the possible merging of NASDAQ and NYSE. While this may or may not happen, such a suggestion is the sign of times where traditional floor-based exchanges may eventually be phased out in favor of computerized trading. Regardless of the format, the stock market will continue to have a strong psychological element so long as humans are involved. This element is perhaps the most intriguing aspect of stocks. But history has shown that the patient, the wise, and the brave investor has always been able to weather the storms and triumph in the end. Will the long-running bull market come to an end at some point, turning into a bear market? The answer is a definite yes. When? That's the wild card. No one can know for sure. When the DJIA was around 7,200 and the NASDAQ Composite was at 1,400 back in 1997, a popular financial magazine advised its readers to abandon the stock market , printing these words in large type on its cover page: Sell Stocks Now. I wonder what the people who heeded this advice think of this magazine now.
Finally, while you are riding the market, don't forget the taxman. Until you realize a profit or loss from your stock trades, the IRS is off your back. Once you actually log a profit from the sale of a stock, the …
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