The two most popular firms that offer stock advisory research services on a subscription basis to individual investors are Morningstar (www.morningstar.com) and Value Line (www .valueline.com). The cost for these services is in the hundreds of dollars per year. A Google search for “stock advisory newsletters” will reveal several dozen firms that offer guidance on stock selections, market updates, and investment advice. You may wish to avoid those that offer suggestions based on a “technical” or “chartist” approach to analyzing stocks rather than a mainstream approach that emphasizes fundamental research.
Economic Data
Investors need to stay aware of trends in the general economy. You need to know the stage of the business cycle (recession or prosperity) and the current interest and inflation rates, and you need to understand how economic conditions are likely to change over the next 12 to 18 months. Economic information is available through almost all media:
• Search engines: Yahoo!, Google, and Momma
• Big newspapers: USA Today, Los Angeles Times, The Wall Street Journal
• Business news: BusinessWeek, Fortune, Forbes, Financial World
• Personal finance: Money magazine and Kiplinger’s Personal Finance Magazine
• Investment sources: The Wall Street Journal, Barron’s, Investor’s Business Daily, MarketWatch
• News magazines: U.S. News & World Report, Time
Stock Market Data
Reports on securities market indexes are provided around the clock in almost every media. “The Dow went up 30 points today.” “The S&P 500 rose 68 points.” When it is reported that “the Dow rose 110 points today in heavy trading,” realize that these “points” are changes in the index, not actual dollar changes in the value of the stocks. A securities market index is an indicator of market performance. It measures the average value of a number of securities chosen as a sample to reflect the behavior of a more general market. Indexes aim to provide a comprehensive, unbiased, and stable barometer of a broad market. Investors use the indexes to determine trends to help in their decision making. Popular indexes include the following:
Dow Jones Industrial Average
Economic Data
Investors need to stay aware of trends in the general economy. You need to know the stage of the business cycle (recession or prosperity) and the current interest and inflation rates, and you need to understand how economic conditions are likely to change over the next 12 to 18 months. Economic information is available through almost all media:
• Search engines: Yahoo!, Google, and Momma
• Big newspapers: USA Today, Los Angeles Times, The Wall Street Journal
• Business news: BusinessWeek, Fortune, Forbes, Financial World
• Personal finance: Money magazine and Kiplinger’s Personal Finance Magazine
• Investment sources: The Wall Street Journal, Barron’s, Investor’s Business Daily, MarketWatch
• News magazines: U.S. News & World Report, Time
Stock Market Data
Reports on securities market indexes are provided around the clock in almost every media. “The Dow went up 30 points today.” “The S&P 500 rose 68 points.” When it is reported that “the Dow rose 110 points today in heavy trading,” realize that these “points” are changes in the index, not actual dollar changes in the value of the stocks. A securities market index is an indicator of market performance. It measures the average value of a number of securities chosen as a sample to reflect the behavior of a more general market. Indexes aim to provide a comprehensive, unbiased, and stable barometer of a broad market. Investors use the indexes to determine trends to help in their decision making. Popular indexes include the following:
Dow Jones Industrial Average
The Dow Jones Industrial Average (DJIA) is the most widely reported of all indexes. The DJIA follows prices of only 30 actively traded blue-chip stocks, including well-known companies such as American Express, AT&T, Caterpillar, Citigroup, Coca-Cola, Wal-Mart, and Walt Disney. The average is calculated by adding the closing prices of the 30 stocks and dividing by a number adjusted for splits, spinoffs, and dividends.
Standard & Poor’s 500 Index
Standard & Poor’s 500 Index
The popular Standard & Poor’s (S&P) 500 Index reports price movements of 500 stocks of large, established, publicly traded firms. It includes stocks of 400 industrial firms, 40 financial institutions, 40 public utilities, and 20 transportation companies. Companies with the highest market values influence the index the greatest.
NASDAQ Composite Index
NASDAQ Composite Index
The NASDAQ Composite Index takes into account virtually all U.S. stocks (about 3000) traded in the over-the-counter market in the automated quotations system operated by the National Association of Securities Dealers. It provides a measure of companies not as popular or as large as those traded on the NYSE, including price behavior of many smaller, more speculative companies, although some big companies (such as Cisco Systems, Intel, and Microsoft) are listed as well.
Russell 3000 Index
Russell 3000 Index
The Russell 3000 Index measures the performance of the 3000 largest U.S. companies based on total market capitalization.
Wilshire 5000 Index
Wilshire 5000 Index
The Wilshire 5000 Index represents the total market value of practically all the 6000-plus U.S.-headquartered stocks that trade on major exchanges.
Foreign Stock Exchanges
Foreign Stock Exchanges
Stock exchanges are located in major cities throughout the world, including London, Sydney, Tokyo, Toronto, and Kuala Lumpur. U.S. investors often check the stock exchanges throughout the night to gain a hint of what might happen that day in the U.S. stock market.
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