Stock Investing For Dummies, 5th Edition - Paul Mladjenovic (2016)


Stock Investing For Dummies, 5th Edition, has been an honor for me to write. I’m grateful for this fifth ride in the stock market with you — a devoted reader of a series that I have come to love.

This edition comes at a critical and uncertain time for both the financial markets and the U.S. (and global!) economy, so take this edition to heart so that you can be a step ahead. Volatility and risk do indeed play a greater role in today’s stock market, and that means that patience and discipline are more important than ever. Fortunately, the investing tools, strategies, and vehicles at your beck and call give you the power to keep your portfolio growing, even in today’s financial battlefield.

Successful stock investing takes diligent work and knowledge, like any other meaningful pursuit. This book can definitely help you avoid the mistakes others have made and can point you in the right direction. It gives you a heads up about trends and conditions that are found in few other stock investing guides. Explore the pages of this book and find the topics that most interest you within the world of stock investing. Let me assure you that I’ve squeezed more than a quarter century of experience, education, and expertise between these covers. My track record is as good as (or better than) the track records of many experts who trumpet their successes. More important, I share information to avoid common mistakes (some of which I made myself!). Understanding what not to do can be just as important as figuring out what to do.

In all the years that I’ve counseled and educated investors, the single difference between success and failure, between gain and loss, has boiled down to two words: applied knowledge. Take this book as your first step in a lifelong learning adventure.

About This Book

The stock market has been a cornerstone of the investor’s passive wealth-building program for over a century and continues in this role. Recent years have been one huge roller-coaster ride for stock investors. Fortunes have been made and lost. With all the media attention and all the talking heads on radio and television, the investing public still didn’t avoid losing trillions in a historic stock market debacle. Sadly, even the so-called experts who understand stocks didn’t see the economic and geopolitical forces that acted like a tsunami on the market. With just a little more knowledge and a few wealth-preserving techniques, more investors could have held on to their hard-earned stock market fortunes. Cheer up, though: This book gives you an early warning on those megatrends and events that will affect your stock portfolio. While other books may tell you about stocks, this book tells you about stocks and what affects them.

This book is designed to give you a realistic approach to making money in stocks. It provides the essence of sound, practical stock investing strategies and insights that have been market-tested and proven from more than 100 years of stock market history. I don’t expect you to read it cover to cover, although I’d be delighted if you read every word! Instead, this book is designed as a reference tool. Feel free to read the chapters in whatever order you choose. You can flip to the sections and chapters that interest you or those that include topics that you need to know more about.

Sidebars (boxes of text) in this book give you a more in-depth look at a certain topic. Although they further illuminate a particular point, these sidebars aren’t crucial to your understanding of the rest of the book. Feel free to read them or skip them. Of course, I’d love for you to read them all, but my feelings won’t be hurt if you decide to skip over them.

The text that accompanies the Technical Stuff icon (see the forthcoming section “Icons Used in This Book”) can be passed over as well. The text associated with this icon gives some technical details about stock investing that are certainly interesting and informative, but you can still come away with the information you need without reading this text.

Stock Investing For Dummies, 5th Edition, is also quite different from the “get rich with stocks” titles that have crammed the bookshelves in recent years. It doesn’t take a standard approach to the topic; it doesn’t assume that stocks are a sure thing and the be-all, end-all of wealth-building. In fact, at times in this book, I tell you not to invest in stocks (or even to bet against them!).

This book can help you succeed not only in up markets but also in down markets. Bull markets and bear markets come and go, but the informed investor can keep making money no matter what. To give you an extra edge, I’ve tried to include information about the investing environment for stocks. Whether it’s politics or hurricanes (or both), you need to know how the big picture affects your stock investment decisions.

One last note: Within this book, you may note that some web addresses break across two lines of text. If you’re reading this book in print and want to visit one of these web pages, simply key in the web address exactly as it’s noted in the text, pretending as though the line break doesn’t exist. If you’re reading this as an e-book, you’ve got it easy — just click the web address to be taken directly to the web page.

Foolish Assumptions

I figure you’ve picked up this book for one or more of the following reasons:

·        You’re a beginner and want a crash course on stock investing that’s an easy read.

·        You’re already a stock investor, and you need a book that allows you to read only those chapters that cover specific stock investing topics of interest to you.

·        You need to review your own situation with the information in this book to see if you missed anything when you invested in that hot stock that your brother-in-law recommended.

·        You need a great gift! When Uncle Mo is upset over his poor stock picks, you can give him this book so he can get back on his financial feet. Be sure to get a copy for his broker, too. (Odds are that the broker was the one who made those picks to begin with.)

Icons Used in This Book

Useful icons appear in the margins of this book; here’s what they mean.

remember When you see this icon, I’m reminding you about some information that you should always keep stashed in your memory, whether you’re new to investing or an old pro.

technicalstuff The text attached to this icon may not be crucial to your success as an investor, but it may enable you to talk shop with investing gurus and better understand the financial pages of your favorite business publication or website.

tip This icon flags a particular bit of advice that just may give you an edge over other investors.

warning Pay special attention to this icon because the advice can prevent headaches, heartaches, and financial aches.

Beyond the Book

In addition to the material in the print or digital book you’re reading right now, Stock Investing For Dummies, 5th Edition, comes with other great content available online. To get the Cheat Sheet, simply go to and search for “Stock Investing For Dummies Cheat Sheet” in the Search box.

Where to Go from Here

You may not need to read every chapter to make you more confident as a stock investor, so feel free to jump around to suit your personal needs. Because every chapter is designed to be as self-contained as possible, it won’t do you any harm to cherry-pick what you really want to read. But if you’re like me, you may still want to check out every chapter because you never know when you may come across a new tip or resource that will make a profitable difference in your stock portfolio. I want you to be successful so that I can brag about you in the next edition!