Break Down Your Money: How to Get Beyond the Noise to Profit in the Markets

Foreword xi

Introduction xiii

Acknowledgments xv

PART I Be An Owner, Not an Employee 1

Chapter 1 To Market to Market, to Buy a . . . What? 3

So What Exactly Is the Stock Market? 3

Buy a Stock and Become a Restaurateur 7

Look to the Indexes for the Market Scoop 10

Wrap-Up 16

Chapter 2 The Lamborghini Murciélago LP6 40 Roadster: A Lifetime of Dividends 19

The Derivation of Dividend 21

Dissecting a Dividend’s Date 23

Rev the Engine with Some Ratios 25

Drive through the Financials 25

It's All About the Little Things 26

Get To Know a DRIP (Dividend Reinvestment Program) 28

What's a DRIP? 28

Of Course, the Company Benefits, Too 30

So How Do You Find a DRIP? 31

DRIP Downers 32

Wrap-Up 33

Chapter 3 Bond, James Bond 35

Bond with the Family 36

The Mature Bond 37

A Bond's Yield 38

Wrap-Up 39

Chapter 4 Mutual Funds and ETFs: For Folks on the Go 41

Mutual Funds: Funds for Kegs 41

Mixing in Exchange-Traded Funds 53

Wrap-Up 59

PART II Look under the Hood 61

Chapter 5 Navigating the Financial Statement: Your "Just Get to the Good Stuff" Guide 63

Find the Financials (Hint: They’re in the Annual Report) 64

Where to Begin 66

Wrap-Up 68

Chapter 6 Auditing Your Potential Investment 69

Open the Company Checkbook: The Balance Sheet 69

Check the Company Report Card: The Income Statement 77

Wrap-Up 85

Chapter 7 Cash Is the Real Deal. Earnings Reports Are Not. 87

Find Your Two Dollars on the Cash Flow Statement 87

Earnings Release: The Ultimate Optimist 93

Wrap-Up 99

Chapter 8 Breakfast with the Federal Reserve: Getting the Economic Porridge "Just Right" 101

Where Did the Fed Come from and Why Do We Need It? 102

Inflation: Bad for the Porridge and the Economy 103

Recession: Bad for Your Hairline and the Economy 104

How the Fed Keeps the Porridge "Just Right" 106

Adjusting Interest Rates: The Long, Slow Simmer 108

Testing the Porridge 113

Wrap-Up 115

PART III Decisions, Decisions 117

Chapter 9 Will You Still Love Me Tomorrow?: Growth, Value, and Momentum Stocks 119

Growth Stocks: Hidden Gems 120

Value Stocks: Till Death Do Us Part 122

Momentum Stocks: One Night Stands 123

Wrap-Up 125

Chapter 10 Evaluating Cars and Stocks 127

Price-to-Earnings Ratio 127

Price-to-Book Ratio 130

Growth Rate 132

Knowing What’s Important: A Case-by-Case Decision 135

Hard to Get Good Help 136

Wrap-Up 136

Chapter 11 The Ins and Outs of IPOs 139

Pop Goes the IPO 140

A Beneficial Blow 143

Knowing When to Make the Move from Public to Private 146

Take That IPO on the Road 147

Sorting through the S-1 149

Getting a Ticket to the Hottest Party in Town 152

Leave the Stock, Take the Fund 156

Wrap-Up 157

Chapter 12 Options and Futures 159

An Introduction to Options 159

Check the Expiration Date: Options Expiration Week 165

Use the Futures Market to Foresee Market 167

Wrap-Up 172

Chapter 13 Bringing It All Together 175

1. Be Specific about Your Goals 176

2. Spread the Risk Around 176

3. Don’t Marry Your Holdings 179

4. Do Your Homework 181

5. Don't Forget to Pay Uncle Sam 184

Wrap-Up 186

Appendix 189

About the Author 193

Index 195