IT'S YOUR MONEY (Christos M. Cotsakos)

3 WAYS TO TRADE STOCKS:


1) Exchange Markets
2) OTC Markets
3) ECN (Electronic Communications Network).


Examples:


NYSE: Exchange Market (big caps)
NASDAQ (OTC): New technology & internet companies


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MAJOR INDICES: Track the up&down price movements of groups of individual stocks and the market.


DJIA: Oldest - uses 30 blue chip stocks mostly on NYSE.


S&P 500: 2nd oldest - tracks 400 industrial, 60 transport, & 40 financial stocks. 


THE VALUE LINE COMPOSITE INDEX: Tracks 1,700 NYSE, AMEX, & OTC stocks of stocks nearest/dearest to the investor.


THE WILSHIRE 5000 TOTAL MARKET INDEX: Tracks all U.S. headquartered equity securities with readily available price data.


NYSE COMPOSITE INDEX: Tracks every security traded on the "big board" (NYSE).


THE RUSSELL 2000: Tracks performance of small caps after 1rst largest 1,000 companies, tracks next largest 2,000.


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HI-TECH INDEXES:

MORGAN STANLEY HI-TECH INDEX

BLOOMBERG U.S. INTERNET INDEX

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PRICE-TO-SALE RATIO: Monitors stocks value rather than earnings per share


PRICE-TO-SALE RATIO: Evaluates per share value of a stock relative to the company's volume of sales or revenues.


PRICE-TO-BOOK VALUE: Compares current market value of a company to the company's value according to its balance sheet (assets minus liabilities)


if stock is selling below book value, it may be a good buy.


RETURN-ON-EQUITY (ROE): EPS/by book value (an ROE over 20 indicates strong growth. 15-20 is healthy).


BETA: Shows how in-sync a stock is compared to a whole index. %10 indicates in-line. If moved up %1- then down %5 -very volatile stock.


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BASIC CHECKLIST FOR ASSESSING INVESTMENT RISK ON A STOCK:


-Is the company growing?
-Is it profitable?
-Is it making good investments?
-Are they reinvesting?


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3 KINDS OF TRENDS ON INDEX SCALE:


TRENDING: up or down consistency; despite short-term oscillation.


OSCILATION: rapid up down of market value/share price value


PATTERNS: identifiable shapes which can be used to predict future price movements


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3 KINDS OF INDEX SCALES:


1) SIMPLE MOVING AVERAGE
2) EXPONENTIAL MOVING AVERAGE - combines two periods of moving averages (13-20) short, & long (50-120)
3) MOVING AVERAGE CONVERGENCE


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FUNDAMENTAL INVESTMENT TIPS:


-Keep a running list and document every transaction.
-Set goals.
-Make rules and stick with them.
-Develop an investing plan.
-Create a framework for analyzing markets.
-Find good investing strategy to meet specific goals.