Understanding Wall Street, Fifth Edition (Understanding Wall Street (Paperback))

Understanding Wall Street, Fifth Edition (Understanding Wall Street (Paperback))

Language: English

Pages: 384

ISBN: 0071633227

Format: PDF / Kindle (mobi) / ePub

A fully revised edition of the INVESTING CLASSIC

For over 30 years this comprehensive, easy-to-read guide has served well as the definitive reference for successful investing. Now in its fifth edition and completely updated, Understanding Wall Street helps investors prosper in today’s challenging economy―whether you’re just beginning or among the millions soon to retire.

Understanding Wall Street, Fifth Edition, has new sections and information on the issues most important to today’s investors, including:

  • How to use the Internet as an investing tool
  • The shift to exchange traded funds (ETFs)
  • The link between Wall Street and Main Street
  • The Risks and rewards of the global economy

Praise for previous editions of Understanding Wall Street:

“Recommended. An excellent introduction to stock market intricacies.” ―Booklist

“A lucid guide to those downtown mysteries.” ―Newsday

“Remarkable . . . it remains as useful as ever . . . Experience may be the best teacher, but this manual runs a close second.” American Library Book Review

Economics Uncut: A Complete Guide to Life, Death and Misadventure

Reminiscences of a Stock Operator: With New Commentary and Insights on the Life and Times of Jesse Livermore (Annotated Edition)

Another Day in Paradise: Front Line Stories from International Aid Workers

The Globalization of Poverty and the New World Order

Structural Adjustment: Theory, Practice and Impacts

The End of the Nation State: The Rise of Regional Economies



















account with a brokerage firm, a process similar in many ways to opening a bank account, the investor is free to buy or sell stocks through any exchange, including the Nasdaq (OTC) market. The following example of a NYSE floor transaction represents the traditional way in which stocks have been 30 UNDERSTANDING WALL STREET bought and sold for well over a century. Actually, the system has been altered and enhanced markedly in recent years. But visualize how the inherent forces of supply and

return on assets are high, the reinvestment rate can be used with greater confidence. In addition to the reinvestment rate formula, there are many other statistical calculations that can be applied when analyzing companies. Here are a few, using the figures from the XYZ Company. Operating Profit Margin (Income Statement) Operating Profit Margin ¢ 13.5% = = Operating Profits Sale ¢ $301 $2,225 This calculation tells an investor how profitable the company’s products are to manufacture and sell.

Sales Operating Margin % Net Income Long-Term Return on Earnings Avg. 10-Year Dividend Debt Equity per Share EPS Growth per Share 1965 $121.1mm 13.7 $ 7.4mm $ 94.0mm 11.0% $0.70 12.4% $0.04 1975 $699.0mm 17.0 $54.2mm $184.1mm 19.7% $4.02 19.1% $0.20 Ten Year (1965–75) Investment Performance +328% NOTE: Per share figures have been adjusted for splits and stock dividends for comparability. GROWTH STOCKS 123 Bill Gates (r.) and Paul Allen in 1981 just after signing their

(1633–1637) The tulip, a bulb plant with long, broad, pointed leaves and a large, brightly colored flower resembling a turban, was introduced into Europe from Turkey some time after 1550. These long-stemmed beauties rapidly gained popularity, especially among the wealthy in Holland and in Germany. By 1610, a single bulb of a new variety was said to be acceptable as dowry for a bride! Since that time, about 100 species and at least 4,000 varieties have been identified. Indeed, these fragile

past thirty years or longer, U.S. consumers have been hailed as the backbone of economic growth. However, during this period, citizens were saving little and living well beyond their means. Now, suddenly, they were buying houses or cashing in their home equity. In August of 2005 at Jackson Hole, Wyoming, Mr. Greenspan said in one of his preretirement speeches that “history had not dealt kindly” with investors (in this case, real estate investors) who appeared to be buying assets (in this case,

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