{"appState":{"pageLoadApiCallsStatus":true},"categoryState":{"relatedCategories":{"headers":{"timestamp":"2023-05-31T12:01:16+00:00"},"categoryId":34290,"data":{"title":"Investment Vehicles","slug":"investment-vehicles","image":{"src":null,"width":0,"height":0},"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290}],"parentCategory":{"categoryId":34288,"title":"Investing","slug":"investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"}},"childCategories":[{"categoryId":34291,"title":"Bonds","slug":"bonds","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34291"},"image":{"src":"/img/background-image-2.fabfbd5c.png","width":0,"height":0},"hasArticle":true,"hasBook":true,"articleCount":150,"bookCount":2},{"categoryId":34292,"title":"Commodities","slug":"commodities","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34292"},"image":{"src":"/img/background-image-1.daf74cf0.png","width":0,"height":0},"hasArticle":true,"hasBook":true,"articleCount":223,"bookCount":2},{"categoryId":34293,"title":"Currency","slug":"currency","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34293"},"image":{"src":"/img/background-image-2.fabfbd5c.png","width":0,"height":0},"hasArticle":true,"hasBook":true,"articleCount":46,"bookCount":1},{"categoryId":34294,"title":"Dividends","slug":"dividends","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34294"},"image":{"src":"/img/background-image-1.daf74cf0.png","width":0,"height":0},"hasArticle":true,"hasBook":true,"articleCount":98,"bookCount":2},{"categoryId":34295,"title":"ETFs","slug":"etfs","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34295"},"image":{"src":"/img/background-image-2.fabfbd5c.png","width":0,"height":0},"hasArticle":true,"hasBook":true,"articleCount":27,"bookCount":1},{"categoryId":34296,"title":"Funds","slug":"funds","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34296"},"image":{"src":"/img/background-image-1.daf74cf0.png","width":0,"height":0},"hasArticle":true,"hasBook":true,"articleCount":194,"bookCount":5},{"categoryId":34297,"title":"Precious Metals","slug":"precious-metals","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34297"},"image":{"src":"/img/background-image-2.fabfbd5c.png","width":0,"height":0},"hasArticle":true,"hasBook":true,"articleCount":22,"bookCount":2},{"categoryId":34298,"title":"Stocks","slug":"stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"},"image":{"src":"/img/background-image-1.daf74cf0.png","width":0,"height":0},"hasArticle":true,"hasBook":true,"articleCount":310,"bookCount":15}],"description":"Where will you park your cash? Come inside for a full rundown of stocks, bonds, commodities, currency, precious metals, and other great choices.","relatedArticles":{"self":"https://dummies-api.dummies.com/v2/articles?category=34290&offset=0&size=5"},"hasArticle":true,"hasBook":true,"articleCount":1073,"bookCount":32},"_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"}},"relatedCategoriesLoadedStatus":"success"},"listState":{"list":{"count":10,"total":1072,"items":[{"headers":{"creationTime":"2016-03-26T22:50:01+00:00","modifiedTime":"2023-04-25T18:42:24+00:00","timestamp":"2023-04-25T21:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"Precious Metals","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34297"},"slug":"precious-metals","categoryId":34297}],"title":"Different Styles of Precious Metals Investing","strippedTitle":"different styles of precious metals investing","slug":"distinguishing-between-styles-of-precious-metals-investing","canonicalUrl":"","seo":{"metaDescription":"Before you start investing or trading in precious metals, you need to understand the concepts of saving , investing , trading , and speculating ; otherwise, the","noIndex":0,"noFollow":0},"content":"Before you start investing or trading in precious metals, you need to understand the concepts of <i>saving</i>, <i>investing</i>, <i>trading</i>, and <i>speculating</i>; otherwise, the financial pitfalls could be very great. The differences aren't just in where your money is but also why and in what manner.\r\n\r\nRight now, millions of people live with no savings and lots of debt, which means that they are speculating with their budgets; retirees are day-trading their portfolios; and financial advisors are telling people to move their money from savings accounts to stocks without looking at the appropriateness of what they're doing.\r\n\r\nMake sure you understand the following terms — knowing the difference is crucial to you in the world of precious metals:\r\n<ul>\r\n \t<li><b>Saving:</b> The classical definition of <i>saving</i> is \"income that has not been spent,\" but the modern-day definition is money set aside in a savings account for a \"rainy day\" or emergency. Ideally, you should have at least three months' worth of gross living expenses sitting blandly in a savings account or money market fund. Although precious metals in the right venue are appropriate for most people, including savers, you need to have cash savings in addition to your precious metals investments. A good example of an appropriate savings venue in precious metals is buying physical gold and/or silver bullion coins as a long-term holding.</li>\r\n \t<li><b>Investing:</b> Investing refers to the act of buying an asset that is meant to be held long-term (in years). The asset will always run into ups and downs, but as long as it's trending upward (a bull market), you'll be okay. Investing in precious metals may not be for everyone, but it is an appropriate consideration for many investment portfolios. The common stock of large or mid-size mining companies is a good example of an appropriate vehicle for investors.</li>\r\n \t<li><b>Trading:</b> Trading is truly short-term in nature and is meant for those with steady nerves and a quick trigger finger. There are many \"trading systems\" out there, and this activity requires extensive knowledge of market behavior along with discipline and a definitive plan. The money employed should be considered risk capital and not money intended for an emergency fund, rent, or retirement. The venue could be mining stocks, but more likely it would be futures and/or options because they are faster-moving markets.</li>\r\n \t<li><b>Speculating:</b> This can be likened to financial gambling. Speculating means making an educated guess about the direction of a particular asset's price move. Speculators look for big price moves to generate a large profit as quickly as possible, but also understand that it can be very risky and volatile. A speculator's appetite for greater potential profit coupled with increased risk is similar to the trader, but the time frame is different. Speculating can be either short-term or long-term. Your venue of choice could be stocks, but more likely, the stocks would typically be of smaller mining companies with greater price potential. Speculating is also done in futures and options.</li>\r\n</ul>","description":"Before you start investing or trading in precious metals, you need to understand the concepts of <i>saving</i>, <i>investing</i>, <i>trading</i>, and <i>speculating</i>; otherwise, the financial pitfalls could be very great. The differences aren't just in where your money is but also why and in what manner.\r\n\r\nRight now, millions of people live with no savings and lots of debt, which means that they are speculating with their budgets; retirees are day-trading their portfolios; and financial advisors are telling people to move their money from savings accounts to stocks without looking at the appropriateness of what they're doing.\r\n\r\nMake sure you understand the following terms — knowing the difference is crucial to you in the world of precious metals:\r\n<ul>\r\n \t<li><b>Saving:</b> The classical definition of <i>saving</i> is \"income that has not been spent,\" but the modern-day definition is money set aside in a savings account for a \"rainy day\" or emergency. Ideally, you should have at least three months' worth of gross living expenses sitting blandly in a savings account or money market fund. Although precious metals in the right venue are appropriate for most people, including savers, you need to have cash savings in addition to your precious metals investments. A good example of an appropriate savings venue in precious metals is buying physical gold and/or silver bullion coins as a long-term holding.</li>\r\n \t<li><b>Investing:</b> Investing refers to the act of buying an asset that is meant to be held long-term (in years). The asset will always run into ups and downs, but as long as it's trending upward (a bull market), you'll be okay. Investing in precious metals may not be for everyone, but it is an appropriate consideration for many investment portfolios. The common stock of large or mid-size mining companies is a good example of an appropriate vehicle for investors.</li>\r\n \t<li><b>Trading:</b> Trading is truly short-term in nature and is meant for those with steady nerves and a quick trigger finger. There are many \"trading systems\" out there, and this activity requires extensive knowledge of market behavior along with discipline and a definitive plan. The money employed should be considered risk capital and not money intended for an emergency fund, rent, or retirement. The venue could be mining stocks, but more likely it would be futures and/or options because they are faster-moving markets.</li>\r\n \t<li><b>Speculating:</b> This can be likened to financial gambling. Speculating means making an educated guess about the direction of a particular asset's price move. Speculators look for big price moves to generate a large profit as quickly as possible, but also understand that it can be very risky and volatile. A speculator's appetite for greater potential profit coupled with increased risk is similar to the trader, but the time frame is different. Speculating can be either short-term or long-term. Your venue of choice could be stocks, but more likely, the stocks would typically be of smaller mining companies with greater price potential. Speculating is also done in futures and options.</li>\r\n</ul>","blurb":"","authors":[{"authorId":9001,"name":"Paul Mladjenovic","slug":"paul-mladjenovic","description":" <p><b>Bryan Borzykowski</b> is an award-winning financial journalist, who writes mostly about investing, personal finance and small business. He’s the co-author of <i>Day Trading For Canadians For Dummies</i> and contributes to the <i>Globe and Mail</i>, <i>Business</i> magazine, the <i>Toronto Star</i>, MoneySense and other leading Canadian publications. You can find Bryan at www. bryanborzykowski.com or on Twitter @bborzyko.</p> <p><b>Andrew Bell</b> was an investment reporter and editor with The Globe and Mail for 12 years. He joined Business News Network as a reporter in 2001. Bell, an import from Dublin, Ireland, was for 10 years the main compiler of Stars & Dogs in Saturday’s Globe. The roundup of hot and damp stocks and mutual funds was an invaluable therapeutic aid in relieving his own myriad jealousies, regrets, and resentments. He has also taken to the stage, where he practises a demanding \"method\" that involves getting the audience and other performers as off-balance and upset as possible. He lives in Cabbagetown, Toronto, with his wife and daughter.</p> <p><b>Christopher Cottier</b>, BSc, MBA, is a senior investment advisor based in British Columbia. In 1982, he left the world of banking to join the investment industry in Vancouver so he could continue to pursue his love of rugby. More than twenty five years later, he’s still managing money and playing rugby. With Betty Jane Wylie, Christopher is the co-author of <i>The Best Is Yet to Come: Enjoying a Financially Secure Retirement</i> (Key Porter). Christopher was ably assisted by Daniel Quon, BA, who has been awarded the Queen Elizabeth 11 Golden Jubilee Medal.</p> <p><b>Andrew Dagys</b>, CMA, is a best-selling author who has written and coauthored several books, including <i>Stocking Investing For Canadians For Dummies</i> and <i>Investing Online For Canadians For Dummies</i>. He has appeared on Canada AM and several popular CBC broadcasts to offer his insights on the Canadian and world investment landscapes. Andrew has contributed columns to <i>CanadianLiving</i>, <i>Forever Young</i>, and other publications. He has appeared on Canada AM and several popular CBC broadcasts to offer his insights on the Canadian and world investment landscapes.</p> <p><b>Matthew Elder</b> is a writer and communications consultant based in Toronto. Previously he was vice-president, content and editorial, of Morningstar Canada. A Montreal native, he was a columnist and editor specializing in personal finance with <i>The Gazette</i> for 10 years before moving to the Financial Post in 1995, where he was mutual funds editor and columnist until joining Morningstar in 2000.</p> <p><b>Lita Epstein</b>, who earned her MBA from Emory University's Goizueta Business School, enjoys helping people develop good financial, investing, and tax planning skills. She designs and teaches online courses and has written more than 20 books, including <i>Bookkeeping For Dummies</i> and <i>Reading Financial Reports For Dummies</i>, both published by Wiley.</p> <p><b>Douglas Gray</b>, B.A., LL.B., formerly a practicing lawyer, has extensive experience in all aspects of real estate and mortgage financing. He has acted on behalf of buyers, sellers, developers, investors, lenders and borrowers. In addition, he has over 35 years of personal experience investing in real estate. He is the author of 26 best-selling real estate, business and personal finance books, as well as a consultant and columnist.<br />Mr. Gray gives seminars on real estate throughout Canada to the public, as well as for professional-development programs for the real estate industry. He has presented to more than 250,000 people and is frequently interviewed by the media as an authority on real estate and small business entrepreneurship. Mr. Gray is president of the Canadian Enterprise Development Group Inc. and lives in Vancouver, BC. His website is www.homebuyer.ca.</p> <p><b>Michael Griffis</b> became an active trader in the mid 1980s. He first traded commodities and precious metals after taking a commodities trading class as part of his MBA program at Rollins College. He became a stockbroker in 1992, where he helped businesses and individuals manage investments in stocks, bonds, mutual funds, retirement plans, 401(k) employee-savings plans, and asset management programs. Michael is an author and business owner and has written about stock trading for online audiences.</p> <p><b>Ann C. Logue</b>, MBA, is the author of <i>Day Trading For Dummies</i> and <i>Emerging Markets For Dummies</i>. She has written for <i>Barron's</i>, <i>The New York Times</i>, <i>Newsweek Japan</i>, <i>Wealth Manager</i>, and the <i>International Monetary Fund</i>. She is a lecturer at the Liautaud Graduate School of Business at the University of Illinois at Chicago. Her current career follows 12 years of experience as an investment analyst. She has a B.A. from Northwestern University and an M.B.A. from the University of Chicago, and she holds the Chartered Financial Analyst (CFA) designation.</p> <p><b>Peter Mitham</b> has written on Canadian real estate for publications in Canada and abroad. He contributes a weekly column of real estate news for Business in Vancouver and writes regularly for <i>Western Investor</i>, a sister publication focused on real estate investment opportunities in Western Canada, as well as Canadian Real Estate Magazine. He has also collaborated with Douglas Gray on <i>The Canadian Landlord's Guide: Expert Advice for the Profitable Real Estate Investor</i> (Wiley).</p> <p><b>Paul Mladjenovic</b>, CFP is a certified financial planner practitioner, writer, and public speaker. His business, PM Financial Services, has helped people with financial and business concerns since 1981. He is the author of <i>Stock Investing For Dummies</i> (Wiley) and has accurately forecast many economic events, such as the rise of gold, the decline of the U.S. dollar, and the housing crisis. Paul’s personal website can be found at www.mladjenovic.com.</p>","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9001"}}],"primaryCategoryTaxonomy":{"categoryId":34297,"title":"Precious Metals","slug":"precious-metals","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34297"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":208993,"title":"Precious Metals Investing For Dummies Cheat Sheet","slug":"precious-metals-investing-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208993"}},{"articleId":200969,"title":"Mining the History of Precious Metals","slug":"mining-the-history-of-precious-metals","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/200969"}},{"articleId":199921,"title":"Investment Strategy: Stagger Your Entry to Limit Your Risk","slug":"investment-strategy-stagger-your-entry-to-limit-your-risk","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/199921"}},{"articleId":199072,"title":"Understanding the Difference between a Correction and a Bear Market","slug":"understanding-the-difference-between-a-correction-and-a-bear-market","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/199072"}},{"articleId":192367,"title":"Questions Before You Begin Precious Metals Investing","slug":"questions-before-you-begin-precious-metals-investing","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/192367"}}],"fromCategory":[{"articleId":275885,"title":"How to Sell Collectible Coins","slug":"how-to-sell-collectible-coins","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/275885"}},{"articleId":275879,"title":"The Basics of Numismatic (Collectible) Coins","slug":"the-basics-of-numismatic-collectible-coins","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/275879"}},{"articleId":275874,"title":"10 Reasons to Have Gold and Silver","slug":"10-reasons-to-have-gold-and-silver","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/275874"}},{"articleId":275869,"title":"Investing: Seeking Out Silver Physical Bullion","slug":"investing-seeking-out-silver-physical-bullion","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/275869"}},{"articleId":275861,"title":"Investing: Going for Gold Physical Bullion","slug":"investing-going-for-gold-physical-bullion","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/275861"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282499,"slug":"precious-metals-investing-for-dummies","isbn":"9780470130872","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"amazon":{"default":"https://www.amazon.com/gp/product/0470130873/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/0470130873/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/0470130873-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/0470130873/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/0470130873/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/precious-metals-investing-for-dummies-cover-9780470130872-203x255.jpg","width":203,"height":255},"title":"Precious Metals Investing For Dummies","testBankPinActivationLink":"","bookOutOfPrint":false,"authorsInfo":"<p><b data-author-id=\"9001\">Paul Mladjenovic</b> is the owner of Prosperity Network and www.Super MoneyLinks.com. He is also the author of <i>Stock Investing For Dummies</i>, 2nd Edition. </p>","authors":[{"authorId":9001,"name":"Paul Mladjenovic","slug":"paul-mladjenovic","description":" <p><b>Bryan Borzykowski</b> is an award-winning financial journalist, who writes mostly about investing, personal finance and small business. He’s the co-author of <i>Day Trading For Canadians For Dummies</i> and contributes to the <i>Globe and Mail</i>, <i>Business</i> magazine, the <i>Toronto Star</i>, MoneySense and other leading Canadian publications. You can find Bryan at www. bryanborzykowski.com or on Twitter @bborzyko.</p> <p><b>Andrew Bell</b> was an investment reporter and editor with The Globe and Mail for 12 years. He joined Business News Network as a reporter in 2001. Bell, an import from Dublin, Ireland, was for 10 years the main compiler of Stars & Dogs in Saturday’s Globe. The roundup of hot and damp stocks and mutual funds was an invaluable therapeutic aid in relieving his own myriad jealousies, regrets, and resentments. He has also taken to the stage, where he practises a demanding \"method\" that involves getting the audience and other performers as off-balance and upset as possible. He lives in Cabbagetown, Toronto, with his wife and daughter.</p> <p><b>Christopher Cottier</b>, BSc, MBA, is a senior investment advisor based in British Columbia. In 1982, he left the world of banking to join the investment industry in Vancouver so he could continue to pursue his love of rugby. More than twenty five years later, he’s still managing money and playing rugby. With Betty Jane Wylie, Christopher is the co-author of <i>The Best Is Yet to Come: Enjoying a Financially Secure Retirement</i> (Key Porter). Christopher was ably assisted by Daniel Quon, BA, who has been awarded the Queen Elizabeth 11 Golden Jubilee Medal.</p> <p><b>Andrew Dagys</b>, CMA, is a best-selling author who has written and coauthored several books, including <i>Stocking Investing For Canadians For Dummies</i> and <i>Investing Online For Canadians For Dummies</i>. He has appeared on Canada AM and several popular CBC broadcasts to offer his insights on the Canadian and world investment landscapes. Andrew has contributed columns to <i>CanadianLiving</i>, <i>Forever Young</i>, and other publications. He has appeared on Canada AM and several popular CBC broadcasts to offer his insights on the Canadian and world investment landscapes.</p> <p><b>Matthew Elder</b> is a writer and communications consultant based in Toronto. Previously he was vice-president, content and editorial, of Morningstar Canada. A Montreal native, he was a columnist and editor specializing in personal finance with <i>The Gazette</i> for 10 years before moving to the Financial Post in 1995, where he was mutual funds editor and columnist until joining Morningstar in 2000.</p> <p><b>Lita Epstein</b>, who earned her MBA from Emory University's Goizueta Business School, enjoys helping people develop good financial, investing, and tax planning skills. She designs and teaches online courses and has written more than 20 books, including <i>Bookkeeping For Dummies</i> and <i>Reading Financial Reports For Dummies</i>, both published by Wiley.</p> <p><b>Douglas Gray</b>, B.A., LL.B., formerly a practicing lawyer, has extensive experience in all aspects of real estate and mortgage financing. He has acted on behalf of buyers, sellers, developers, investors, lenders and borrowers. In addition, he has over 35 years of personal experience investing in real estate. He is the author of 26 best-selling real estate, business and personal finance books, as well as a consultant and columnist.<br />Mr. Gray gives seminars on real estate throughout Canada to the public, as well as for professional-development programs for the real estate industry. He has presented to more than 250,000 people and is frequently interviewed by the media as an authority on real estate and small business entrepreneurship. Mr. Gray is president of the Canadian Enterprise Development Group Inc. and lives in Vancouver, BC. His website is www.homebuyer.ca.</p> <p><b>Michael Griffis</b> became an active trader in the mid 1980s. He first traded commodities and precious metals after taking a commodities trading class as part of his MBA program at Rollins College. He became a stockbroker in 1992, where he helped businesses and individuals manage investments in stocks, bonds, mutual funds, retirement plans, 401(k) employee-savings plans, and asset management programs. Michael is an author and business owner and has written about stock trading for online audiences.</p> <p><b>Ann C. Logue</b>, MBA, is the author of <i>Day Trading For Dummies</i> and <i>Emerging Markets For Dummies</i>. She has written for <i>Barron's</i>, <i>The New York Times</i>, <i>Newsweek Japan</i>, <i>Wealth Manager</i>, and the <i>International Monetary Fund</i>. She is a lecturer at the Liautaud Graduate School of Business at the University of Illinois at Chicago. Her current career follows 12 years of experience as an investment analyst. She has a B.A. from Northwestern University and an M.B.A. from the University of Chicago, and she holds the Chartered Financial Analyst (CFA) designation.</p> <p><b>Peter Mitham</b> has written on Canadian real estate for publications in Canada and abroad. He contributes a weekly column of real estate news for Business in Vancouver and writes regularly for <i>Western Investor</i>, a sister publication focused on real estate investment opportunities in Western Canada, as well as Canadian Real Estate Magazine. He has also collaborated with Douglas Gray on <i>The Canadian Landlord's Guide: Expert Advice for the Profitable Real Estate Investor</i> (Wiley).</p> <p><b>Paul Mladjenovic</b>, CFP is a certified financial planner practitioner, writer, and public speaker. His business, PM Financial Services, has helped people with financial and business concerns since 1981. He is the author of <i>Stock Investing For Dummies</i> (Wiley) and has accurately forecast many economic events, such as the rise of gold, the decline of the U.S. dollar, and the housing crisis. Paul’s personal website can be found at www.mladjenovic.com.</p>","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9001"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;precious-metals&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9780470130872&quot;]}]\" id=\"du-slot-64483f8f10a92\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;precious-metals&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9780470130872&quot;]}]\" id=\"du-slot-64483f8f11261\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Five years","lifeExpectancySetFrom":"2023-04-25T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":200454},{"headers":{"creationTime":"2021-03-17T15:20:38+00:00","modifiedTime":"2023-04-25T17:43:35+00:00","timestamp":"2023-04-25T18:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"Stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"},"slug":"stocks","categoryId":34298}],"title":"Strategies for Investing in Cannabis Stocks","strippedTitle":"strategies for investing in cannabis stocks","slug":"investing-in-cannabis-spotting-opportunities-to-buy-or-sell","canonicalUrl":"","seo":{"metaDescription":"Learn how investors spot opportunities to buy (upward momentum) or sell (downward momentum) cannabis stocks.","noIndex":0,"noFollow":0},"content":"Momentum investors (speculators) lean toward technical analysis instead of fundamental analysis when choosing which stocks to buy, when to buy, and when to sell. <a href=\"https://www.dummies.com/personal-finance/investing/frontier-markets/investing-in-cannabis-for-dummies-cheat-sheet/\">Investors</a> who rely on technical analysis spend most of their time looking at charts to spot patterns in an attempt to predict the future movement of a stock’s price.\r\n<h2 id=\"tab1\" >Upward momentum</h2>\r\nWith momentum investing, you basically want to buy stocks that show sustainable upward momentum and sell them before the price starts to trend downward.\r\n\r\nThe key word here is <em>sustainable,</em> which means you’re looking for a pattern that you have reason to believe will continue for the foreseeable future. One way to identify a stock with sustainable upward momentum is to look at its 50-day and 100-day simple moving averages in relation to one another.\r\n\r\nA <em>simple moving average (SMA)</em> shows the change in a stock’s <em>average</em> price over a certain number of days. For example, to calculate the five-day SMA of a stock for a given day, you total the stock’s closing prices over the past five days and divide by five. To calculate the 50-day moving average, you total the stock’s closing prices over the past 50 days and divide by 50.\r\n\r\nTo create an SMA chart, you calculate the SMA for the desired period (for example, for each of the past 50 days) and plot those points on a chart, as shown. You end up with a line or curve that smooths out the daily fluctuations in the share price (which reduces the “noise”) to make the stock’s overall momentum clearer and easier to visualize and understand.\r\n<p class=\"article-tips remember\">The good news is that you don’t have to calculate simple moving averages and chart them. Nearly every online broker features moving average charts as part of its service. I explained how to calculate the SMA and create a chart just so you would have a clearer understanding of how this investment strategy works.</p>\r\n\r\n\r\n[caption id=\"attachment_283101\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-283101\" src=\"https://www.dummies.com/wp-content/uploads/cannabis-invest-moving-chart.jpg\" alt=\"moving average chart\" width=\"556\" height=\"342\" /> A 50-day moving average chart for Curaleaf[/caption]\r\n<p class=\"article-tips tip\">As a momentum investor, you look for times when the short-term upward trend is strong enough to trigger a positive shift in the long-term trend. The most common way to spot such a shift is to chart a stock’s 50-day and 100-day moving averages and look for points where the two lines cross. When the 50-day SMA line moves from below to above the 100-day SMA line (see the following figure), this is a sign that the short-term trend <em>may</em> be strong enough to trigger an upward shift in the long-term momentum — a buy signal.</p>\r\nHowever, if you look at enough of these moving averages charts, you start to notice that this technique doesn’t always work. You’ll notice plenty of instances where the 50-day SMA line moves from below to above the 100-day SMA line that corresponds with a sell-off. Likewise, you’ll notice plenty of instances where the 50-day SMA line dives down below the 100-day SMA line corresponds to an upward shift in share price. In other words, don’t blindly follow this technique.\r\n\r\n[caption id=\"attachment_283100\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-283100\" src=\"https://www.dummies.com/wp-content/uploads/cannabis-invest-sma.jpg\" alt=\"upward momentum\" width=\"556\" height=\"347\" /> Look for points where the 50-day SMA moves above the 100-day SMA.[/caption]\r\n\r\nMomentum investors may examine the SMA over longer periods or use other types of charts to gauge a stock’s momentum and identify buy and sell opportunities, but this basic method enables you to wrap your head around the concept and try it if you so desire.\r\n<p class=\"article-tips warning\">Be careful buying into an apparent rally, because short sellers can quickly inflate a stock’s price when they exit their positions in anticipation that the stock price will soon tank.</p>\r\n\r\n<h2 id=\"tab2\" ><a name=\"_Toc54539134\"></a>Downward momentum</h2>\r\nAfter buying a cannabis stock with upward momentum, your next decision is when to sell it. At this point, monitoring the stock’s SMA is even more important, because at any time in the future, the trend can flip from upward to downward. You want to sell your stock as close to the stock’s peak as possible, and as you feel comfortable doing. As is commonly said among investors, “Pigs get fat, and hogs get slaughtered.” Don’t be too greedy when deciding the right time to sell.\r\n<p class=\"article-tips tip\">If you’re unsure whether a stock has peaked, consider cashing out your principle (the initial amount you invested) and riding to the top with your gains (the remaining shares). As you become more familiar with cannabis stocks, you may want to consider taking bigger risks. Deciding when and how much to sell depends on your personal risk tolerance and how much you can afford to and want to gamble.</p>\r\nNow, instead of looking for points where the 50-day SMA moves from below to above the line for the 100-day SMA, you want to watch for when that 50-day line crosses down from above to below the 100-day line (see Figure 13-3). How far that 50-day line dives down before you pull the trigger is up to you, but if you want to remain true to this strategy, the sooner you sell, the better.\r\n\r\n[caption id=\"attachment_283099\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-283099\" src=\"https://www.dummies.com/wp-content/uploads/cannabis-invest-downward.jpg\" alt=\"downward momentum\" width=\"556\" height=\"344\" /> Sell when the 50-day SMA drops below the 100-day SMA.[/caption]","description":"Momentum investors (speculators) lean toward technical analysis instead of fundamental analysis when choosing which stocks to buy, when to buy, and when to sell. <a href=\"https://www.dummies.com/personal-finance/investing/frontier-markets/investing-in-cannabis-for-dummies-cheat-sheet/\">Investors</a> who rely on technical analysis spend most of their time looking at charts to spot patterns in an attempt to predict the future movement of a stock’s price.\r\n<h2 id=\"tab1\" >Upward momentum</h2>\r\nWith momentum investing, you basically want to buy stocks that show sustainable upward momentum and sell them before the price starts to trend downward.\r\n\r\nThe key word here is <em>sustainable,</em> which means you’re looking for a pattern that you have reason to believe will continue for the foreseeable future. One way to identify a stock with sustainable upward momentum is to look at its 50-day and 100-day simple moving averages in relation to one another.\r\n\r\nA <em>simple moving average (SMA)</em> shows the change in a stock’s <em>average</em> price over a certain number of days. For example, to calculate the five-day SMA of a stock for a given day, you total the stock’s closing prices over the past five days and divide by five. To calculate the 50-day moving average, you total the stock’s closing prices over the past 50 days and divide by 50.\r\n\r\nTo create an SMA chart, you calculate the SMA for the desired period (for example, for each of the past 50 days) and plot those points on a chart, as shown. You end up with a line or curve that smooths out the daily fluctuations in the share price (which reduces the “noise”) to make the stock’s overall momentum clearer and easier to visualize and understand.\r\n<p class=\"article-tips remember\">The good news is that you don’t have to calculate simple moving averages and chart them. Nearly every online broker features moving average charts as part of its service. I explained how to calculate the SMA and create a chart just so you would have a clearer understanding of how this investment strategy works.</p>\r\n\r\n\r\n[caption id=\"attachment_283101\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-283101\" src=\"https://www.dummies.com/wp-content/uploads/cannabis-invest-moving-chart.jpg\" alt=\"moving average chart\" width=\"556\" height=\"342\" /> A 50-day moving average chart for Curaleaf[/caption]\r\n<p class=\"article-tips tip\">As a momentum investor, you look for times when the short-term upward trend is strong enough to trigger a positive shift in the long-term trend. The most common way to spot such a shift is to chart a stock’s 50-day and 100-day moving averages and look for points where the two lines cross. When the 50-day SMA line moves from below to above the 100-day SMA line (see the following figure), this is a sign that the short-term trend <em>may</em> be strong enough to trigger an upward shift in the long-term momentum — a buy signal.</p>\r\nHowever, if you look at enough of these moving averages charts, you start to notice that this technique doesn’t always work. You’ll notice plenty of instances where the 50-day SMA line moves from below to above the 100-day SMA line that corresponds with a sell-off. Likewise, you’ll notice plenty of instances where the 50-day SMA line dives down below the 100-day SMA line corresponds to an upward shift in share price. In other words, don’t blindly follow this technique.\r\n\r\n[caption id=\"attachment_283100\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-283100\" src=\"https://www.dummies.com/wp-content/uploads/cannabis-invest-sma.jpg\" alt=\"upward momentum\" width=\"556\" height=\"347\" /> Look for points where the 50-day SMA moves above the 100-day SMA.[/caption]\r\n\r\nMomentum investors may examine the SMA over longer periods or use other types of charts to gauge a stock’s momentum and identify buy and sell opportunities, but this basic method enables you to wrap your head around the concept and try it if you so desire.\r\n<p class=\"article-tips warning\">Be careful buying into an apparent rally, because short sellers can quickly inflate a stock’s price when they exit their positions in anticipation that the stock price will soon tank.</p>\r\n\r\n<h2 id=\"tab2\" ><a name=\"_Toc54539134\"></a>Downward momentum</h2>\r\nAfter buying a cannabis stock with upward momentum, your next decision is when to sell it. At this point, monitoring the stock’s SMA is even more important, because at any time in the future, the trend can flip from upward to downward. You want to sell your stock as close to the stock’s peak as possible, and as you feel comfortable doing. As is commonly said among investors, “Pigs get fat, and hogs get slaughtered.” Don’t be too greedy when deciding the right time to sell.\r\n<p class=\"article-tips tip\">If you’re unsure whether a stock has peaked, consider cashing out your principle (the initial amount you invested) and riding to the top with your gains (the remaining shares). As you become more familiar with cannabis stocks, you may want to consider taking bigger risks. Deciding when and how much to sell depends on your personal risk tolerance and how much you can afford to and want to gamble.</p>\r\nNow, instead of looking for points where the 50-day SMA moves from below to above the line for the 100-day SMA, you want to watch for when that 50-day line crosses down from above to below the 100-day line (see Figure 13-3). How far that 50-day line dives down before you pull the trigger is up to you, but if you want to remain true to this strategy, the sooner you sell, the better.\r\n\r\n[caption id=\"attachment_283099\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-283099\" src=\"https://www.dummies.com/wp-content/uploads/cannabis-invest-downward.jpg\" alt=\"downward momentum\" width=\"556\" height=\"344\" /> Sell when the 50-day SMA drops below the 100-day SMA.[/caption]","blurb":"","authors":[{"authorId":33497,"name":"Steven R. Gormley","slug":"steven-r-gormley","description":" <p><b>Steven Gormley</b> is CEO at Radiko Holdings. He&#39;s a celebrated expert in the legal marijuana sector and his analyses have been featured prominently in media outlets like <i>Forbes,</i> the <i>Wall Street Journal</i> , and <i>Marketwatch.</i> Steven is also Chief Operating Officer of Silverback Investments, Inc, a management company in the cannabis space. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/33497"}}],"primaryCategoryTaxonomy":{"categoryId":34298,"title":"Stocks","slug":"stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Upward momentum","target":"#tab1"},{"label":"Downward momentum","target":"#tab2"}],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":283116,"title":"10 Reasons Not to Invest in Marijuana Stocks","slug":"10-reasons-not-to-invest-in-marijuana-stocks","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283116"}},{"articleId":283111,"title":"11 Criteria for Choosing a Cannabis Investment","slug":"11-criteria-for-choosing-a-cannabis-investment","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283111"}},{"articleId":283105,"title":"Cannabis Investments: Risks Inherent in Momentum Investing","slug":"cannabis-investments-risks-inherent-in-momentum-investing","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283105"}},{"articleId":283089,"title":"Investing in Cannabis: The Bid-Ask Spread","slug":"investing-in-cannabis-the-bid-ask-spread","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283089"}},{"articleId":282966,"title":"Over-the-Counter Marijuana Stocks","slug":"over-the-counter-marijuana-stocks","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/282966"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":0,"slug":null,"isbn":null,"categoryList":null,"amazon":null,"image":null,"title":null,"testBankPinActivationLink":null,"bookOutOfPrint":false,"authorsInfo":null,"authors":null,"_links":null},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;stocks&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-6448155f88d7b\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;stocks&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-6448155f8942b\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"One year","lifeExpectancySetFrom":"2023-04-25T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":283098},{"headers":{"creationTime":"2016-03-27T16:49:10+00:00","modifiedTime":"2023-04-13T16:37:22+00:00","timestamp":"2023-04-13T18:01:02+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"ETFs","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34295"},"slug":"etfs","categoryId":34295}],"title":"ETFs For Canadians For Dummies Cheat Sheet","strippedTitle":"etfs for canadians for dummies cheat sheet","slug":"exchange-traded-funds-for-canadians-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Learn about exchange-traded funds, how to incorporate them into your investment portfolio, and how to choose the best ETFs.","noIndex":0,"noFollow":0},"content":"An exchange-traded fund (ETF) is something of a cross between an index mutual fund and a stock. It’s like a mutual fund but has some key differences you’ll want to be sure you understand.\r\n\r\nHere, you discover how to get some ETFs into your portfolio, how to choose smart ETFs, and how ETFs differ from mutual funds.","description":"An exchange-traded fund (ETF) is something of a cross between an index mutual fund and a stock. It’s like a mutual fund but has some key differences you’ll want to be sure you understand.\r\n\r\nHere, you discover how to get some ETFs into your portfolio, how to choose smart ETFs, and how ETFs differ from mutual funds.","blurb":"","authors":[{"authorId":34416,"name":"Bryan Borzykowski","slug":"bryan-borzykowski","description":"<b>Bryan Borzykowski</b> is an award-winning financial journalist, who writes mostly about investing, personal finance and small business. He’s the co-author of <i>Day Trading For Canadians For Dummies</i> and contributes to the <i>Globe and Mail</i>, <i>Business</i> magazine, the <i>Toronto Star</i>, MoneySense and other leading Canadian publications. You can find Bryan at www. bryanborzykowski.com or on Twitter @bborzyko.","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34416"}},{"authorId":9023,"name":"Russell Wild","slug":"russell-wild","description":" <b>Russell Wild,</b> MBA, an expert on index investing, is a fee-only financial planner and investment advisor and the principal of Global Portfolios. 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He’s the co-author of <i>Day Trading For Canadians For Dummies</i> and contributes to the <i>Globe and Mail</i>, <i>Business</i> magazine, the <i>Toronto Star</i>, MoneySense and other leading Canadian publications. You can find Bryan at www. bryanborzykowski.com or on Twitter @bborzyko. <b><b data-author-id=\"9023\">Russell Wild</b>,</b> MBA, an expert on index investing, is a fee-only financial planner and investment advisor and the principal of Global Portfolios. He is the author or coauthor of nearly two dozen nonfiction books.</p>","authors":[{"authorId":34416,"name":"Bryan Borzykowski","slug":"bryan-borzykowski","description":"<b>Bryan Borzykowski</b> is an award-winning financial journalist, who writes mostly about investing, personal finance and small business. He’s the co-author of <i>Day Trading For Canadians For Dummies</i> and contributes to the <i>Globe and Mail</i>, <i>Business</i> magazine, the <i>Toronto Star</i>, MoneySense and other leading Canadian publications. 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If that describes you, look for a <em>fee-only </em>financial planner (someone who does not earn commissions on your investments).</p>\n<p>Here are some questions to ask when you meet that person:</p>\n<ul>\n<li>Given my personal economics, how much risk should I be taking with my money? Specifically, what percent of my portfolio should be in stock ETFs and what percent in bond ETFs?</li>\n<li>Given the size of my portfolio, how many individual ETFs would you suggest?</li>\n<li>Which brokerage house do you recommend for housing my ETF portfolio?</li>\n<li>What is the historical rate of return on the ETF portfolio that you are suggesting, and just how volatile can it be?</li>\n<li>Given my age, my tax bracket, and my employment, what kind of account — RRSP, TFSA or non-registered account – do you suggest for my ETFs?</li>\n<li>What selection of ETFs would you advise for an optimally diversified portfolio?</li>\n<li>Do I keep my present investments, or sell them? If I keep them, how are you going to choose ETFs that best complement those investments?</li>\n<li>Can you help me juggle the investments in my RRSP to complement my new ETF portfolio?</li>\n</ul>\n"},{"title":"Choosing the best ETFs","thumb":null,"image":null,"content":"<p>With about 1,000 Canadian-listed exchange-traded funds available — and many more internationally — where do you start to shop? The answer depends on your objective.</p>\n<p>If you&#8217;re looking to round out an existing portfolio of stocks or mutual funds, your ETFs should complement your existing investments. Your goal is always to have a well-diversified collection of investments.</p>\n<p>If you&#8217;re starting to build a portfolio, you want to make sure to include stocks and bonds and to diversify within those two broad asset classes.</p>\n<p>There&#8217;s not much in the world of stocks, bonds, and commodities that can’t be satisfied with ETFs. Keep the following guidelines in mind as you make selections:</p>\n<ul>\n<li><strong>Mix and match your holdings appropriately. </strong>You not only want a well-diversified portfolio, but you also want one that includes various asset classes that tend to go up and down in value at different times. There’s no point to holding four different ETFs that all invest in large-cap stocks. Hold a Canadian large-cap ETF <em>and</em> a small-cap, a U.S. stock ETF <em>and </em>an international stock ETF.</li>\n<li><strong>Go for lowest cost. </strong>As with any other investment vehicle, be careful of paying more than you need to. Although most ETFs are very economical, some are more economical than others. You may not always want to pick the cheapest, but certainly aim in that direction.</li>\n<li><strong>Don’t sweat the small stuff. </strong>Two ETFs that track similar indexes (such as, say, large value stocks) are not going to be all that different from one another. Spend some time researching your options, but don’t agonize over your selection. Much more important — perhaps worth <em>a little</em> agony — is choosing ETFs that track dissimilar indexes so your eggs are in different baskets.</li>\n<li><strong>Go passive. </strong>A handful of ETFs promise “active management.” Know that active management has an awfully spotty track record. The bulk, if not all, of your ETF portfolio should be in passively managed (indexed) ETFs.</li>\n<li><strong>Look for breadth. </strong>Examine the holdings of the ETF. As a rule, no one security (such as, for example, Shopify or Apple) should represent more than 10 percent of the ETF’s total assets.</li>\n</ul>\n"},{"title":"How ETFs differ from mutual funds","thumb":null,"image":null,"content":"<p>At first glance, an exchange-traded fund (ETF) may seem awfully similar to a mutual fund. After all, like ETFs, mutual funds also represent baskets of stocks or bonds.</p>\n<p>The two, however, are certainly not twins. Maybe not even siblings. Cousins are more like it. Here are some of the significant differences between ETFs and mutual funds:</p>\n<ul>\n<li>ETFs are bought and sold just like stocks (through a brokerage house, either by phone or online), and their price can change from second to second. Mutual fund orders can be made during the day, but the actual trade doesn’t occur until after the markets close.</li>\n<li>ETFs tend to represent indexes — entire markets or market segments — and the managers of the ETFs tend to do very little trading of securities in the ETF. (The ETFs are <em>passively</em> managed.)</li>\n<li>Although they require you to pay small trading fees, ETFs usually wind up costing you much less than a mutual fund because the ongoing management fees are typically much less, and there is never a <em>load</em> (an entrance or exit fee, sometimes an exorbitant one) as there is with some mutual funds.</li>\n<li>Because of low portfolio turnover and also the way they are structured, investment gains on ETFs usually are taxed more gingerly than the gains on mutual funds.</li>\n</ul>\n<p>The following table provides a quick look at some ways that investing in ETFs differs from investing in mutual funds.</p>\n<table>\n<tbody>\n<tr>\n<td width=\"159\"></td>\n<td width=\"151\"><strong>ETFs</strong></td>\n<td width=\"153\"><strong>Mutual Funds</strong></td>\n</tr>\n<tr>\n<td width=\"159\">Are they priced, bought, and sold throughout the day?</td>\n<td width=\"151\">Yes</td>\n<td width=\"153\">No</td>\n</tr>\n<tr>\n<td width=\"159\">Do they offer some investment diversification?</td>\n<td width=\"151\">Yes</td>\n<td width=\"153\">Yes</td>\n</tr>\n<tr>\n<td width=\"159\">Do you have to make a required minimum investment?</td>\n<td width=\"151\">No</td>\n<td width=\"153\">Yes</td>\n</tr>\n<tr>\n<td width=\"159\">Do you purchase through a broker or online brokerage?</td>\n<td width=\"151\">Yes</td>\n<td width=\"153\">Yes</td>\n</tr>\n<tr>\n<td width=\"159\">Do you pay a fee or commission to make a trade?</td>\n<td width=\"151\">Often</td>\n<td width=\"153\">Very rarely</td>\n</tr>\n<tr>\n<td width=\"159\">Can you buy/sell options?</td>\n<td width=\"151\">Yes</td>\n<td width=\"153\">No</td>\n</tr>\n<tr>\n<td width=\"159\">Are they indexed (passively managed)?</td>\n<td width=\"151\">Typically</td>\n<td width=\"153\">Atypically</td>\n</tr>\n<tr>\n<td width=\"159\">Can you make money or lose money?</td>\n<td width=\"151\">Yes</td>\n<td width=\"153\">Yes</td>\n</tr>\n</tbody>\n</table>\n<p>&nbsp;</p>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Five years","lifeExpectancySetFrom":"2023-04-13T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":207916},{"headers":{"creationTime":"2016-03-27T16:58:22+00:00","modifiedTime":"2023-04-12T20:41:15+00:00","timestamp":"2023-04-12T21:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"Stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"},"slug":"stocks","categoryId":34298}],"title":"Stock Investing For Canadians For Dummies Cheat Sheet","strippedTitle":"stock investing for canadians for dummies cheat sheet","slug":"stock-investing-for-canadians-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Quick introduction to stock investing in Canada, including some essential resources and financial measures.","noIndex":0,"noFollow":0},"content":"Stock investing can be exciting, but it shouldn’t be a rollercoaster ride for Canadian investors. If you know how to read company reports and what financial measures to review, you’re more likely to pick a winning stock.\r\n\r\nStaying up to date on market conditions ensures you’ll know when it’s best to buy or sell.","description":"Stock investing can be exciting, but it shouldn’t be a rollercoaster ride for Canadian investors. If you know how to read company reports and what financial measures to review, you’re more likely to pick a winning stock.\r\n\r\nStaying up to date on market conditions ensures you’ll know when it’s best to buy or sell.","blurb":"","authors":[{"authorId":34409,"name":"Andrew Dagys","slug":"andrew-dagys","description":"<b>Andrew Dagys</b> is a professional accountant and the bestselling author of over a dozen books on investing, financial planning, and technology.","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34409"}}],"primaryCategoryTaxonomy":{"categoryId":34298,"title":"Stocks","slug":"stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":283116,"title":"10 Reasons Not to Invest in Marijuana Stocks","slug":"10-reasons-not-to-invest-in-marijuana-stocks","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283116"}},{"articleId":283111,"title":"11 Criteria for Choosing a Cannabis Investment","slug":"11-criteria-for-choosing-a-cannabis-investment","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283111"}},{"articleId":283105,"title":"Cannabis Investments: Risks Inherent in Momentum Investing","slug":"cannabis-investments-risks-inherent-in-momentum-investing","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283105"}},{"articleId":283098,"title":"Investing in Cannabis: Spotting Opportunities to Buy or Sell","slug":"investing-in-cannabis-spotting-opportunities-to-buy-or-sell","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283098"}},{"articleId":283089,"title":"Investing in Cannabis: The Bid-Ask Spread","slug":"investing-in-cannabis-the-bid-ask-spread","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283089"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282609,"slug":"stock-investing-for-canadians-for-dummies-5th-edition","isbn":"9781394168835","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"amazon":{"default":"https://www.amazon.com/gp/product/1394168837/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1394168837/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1394168837-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1394168837/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1394168837/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/stock-investing-for-canadians-for-dummies-6th-edition-cover-9781394168835-204x255.jpg","width":204,"height":255},"title":"Stock Investing For Canadians For Dummies, 6th Edition","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><b><b data-author-id=\"34409\">Andrew Dagys</b></b> is a professional accountant and the bestselling author of over a dozen books on investing, financial planning, and technology.</p>","authors":[{"authorId":34409,"name":"Andrew Dagys","slug":"andrew-dagys","description":"<b>Andrew Dagys</b> is a professional accountant and the bestselling author of over a dozen books on investing, financial planning, and technology.","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34409"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = 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Canada","slug":"the-ten-most-important-points-about-stock-investing-in-canada","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195563"}},{"articleId":195564,"title":"Mandatory Reading List for Canadian Stock Investors","slug":"mandatory-reading-list-for-canadian-stock-investors","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195564"}},{"articleId":195561,"title":"Top Ten Web Sites for Canadian Stock Investors","slug":"top-ten-web-sites-for-canadian-stock-investors","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195561"}},{"articleId":195560,"title":"Company Data Every Stock Investor Should Examine","slug":"company-data-every-stock-investor-should-examine","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195560"}},{"articleId":195509,"title":"The Best Financial Measures for Stock Investing","slug":"the-best-financial-measures-for-stock-investing","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195509"}}],"content":[{"title":"The ten most important points about stock investing in Canada","thumb":null,"image":null,"content":"<p>Stock investing is a great way for Canadians to build wealth, but it can have its pitfalls. This list spells out the essentials every stock investor should remember.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\">You’re not buying a stock; you’re buying a company.</p>\n</li>\n<li>\n<p class=\"first-para\">The primary reason you invest in a stock is because the company is making a profit.</p>\n</li>\n<li>\n<p class=\"first-para\">If you buy a stock when the company isn’t making a profit, you’re not investing — you’re speculating.</p>\n</li>\n<li>\n<p class=\"first-para\">A stock (or stocks in general) should never represent 100 percent of your assets.</p>\n</li>\n<li>\n<p class=\"first-para\">In some cases (such as a severe bear market), stocks aren’t a good investment at all.</p>\n</li>\n<li>\n<p class=\"first-para\">A stock’s price is dependent on the company, which in turn is dependent on its environment, which includes its customer base, its industry, the general economy, and the political climate.</p>\n</li>\n<li>\n<p class=\"first-para\">Your common sense and logic can be just as important in choosing a good stock as the advice of any investment expert.</p>\n</li>\n<li>\n<p class=\"first-para\">Always have well-reasoned answers to questions such as “Why are you investing in stocks?” and “Why are you investing in a particular stock?”</p>\n</li>\n<li>\n<p class=\"first-para\">If you have no idea about the prospects of a company (and sometimes even if you think you do), always use stop-loss orders.</p>\n</li>\n<li>\n<p class=\"first-para\">Even if your philosophy is to buy and hold for the long term, continue to monitor your stocks and consider selling them if they’re not appreciating or if general economic conditions have changed.</p>\n</li>\n</ul>\n"},{"title":"Mandatory reading list for Canadian stock investors","thumb":null,"image":null,"content":"<p>With so much information on newsstands and in your local library, it’s hard to know what are the best sources for stock investing information in Canada. This handy list tells you the five top resources you should consult as a stock investor:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\">The company’s annual report, including its financial statements</p>\n</li>\n<li>\n<p class=\"first-para\">The reports that the company files with Canadian and U.S. securities regulators</p>\n</li>\n<li>\n<p class=\"first-para\"><i>Investor’s Digest of Canada</i></p>\n</li>\n<li>\n<p class=\"first-para\"><i>Investor’s Business Daily</i></p>\n</li>\n<li>\n<p class=\"first-para\"><i>The Globe and Mail </i>and<i> National Post</i></p>\n</li>\n</ul>\n"},{"title":"Top ten websites for Canadian stock investors","thumb":null,"image":null,"content":"<p>The web is full of sites promising great stock investing information, but who can you trust? Here are ten sites that offer Canadian stock investors reliable, trustworthy stock investing news and commentary.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><a href=\"http://www.adviceforinvestors.com\" target=\"_blank\" rel=\"noopener\">Advice for Investors</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.bloomberg.com\" target=\"_blank\" rel=\"noopener\">Bloomberg.com</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.csi.ca\" target=\"_blank\" rel=\"noopener\">Canadian Securities Institute</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"https://canoe.com/category/business/\" target=\"_blank\" rel=\"noopener\">Canoe Money</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.money.cnn.com\" target=\"_blank\" rel=\"noopener\">CNNMoney.com</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.newswire.ca\" target=\"_blank\" rel=\"noopener\">CNW Group</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.marketwatch.com\" target=\"_blank\" rel=\"noopener\">MarketWatch</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.stockhouse.com\" target=\"_blank\" rel=\"noopener\">Stockhouse</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.tmx.com\" target=\"_blank\" rel=\"noopener\">TMX Group</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.finance.yahoo.com\" target=\"_blank\" rel=\"noopener\">Yahoo! Finance</a></p>\n</li>\n</ul>\n"},{"title":"Company data every stock investor should examine","thumb":null,"image":null,"content":"<p>Before you invest in a company’s stock, get a hold of its annual report and search out the following information. This data will let you know if a company’s stock is worth investing in.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Cash flow:</b> The company should be a cash generator.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Debt: </b>The number should be lower than, or about the same as, the previous year’s.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Earnings:</b> The bottom line should be higher than the previous year’s.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Equity:</b> The number should be higher than the previous year’s.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Sales:</b> This top-line number should be higher than the previous year’s.</p>\n</li>\n</ul>\n"},{"title":"The best financial measures for stock investing","thumb":null,"image":null,"content":"<p>Financial ratios help investors find stocks that offer good value by giving numbers meaning and putting them into perspective. If you’re considering investing in a company’s stock, ensure that the company passes these ratio tests.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Price-to-earnings (P/E) ratio:</b> For large-cap stocks, the ratio should be under 20. For all stocks (including growth, small-cap, and speculative issues), it shouldn’t exceed 40.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Price-to-sales (P/S) ratio:</b> This ratio should be as close to 1 as possible (or below 1).</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Return on equity (ROE):</b> The ROE should be going up by at least 10 percent.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Earnings growth:</b> Earnings should be at least 10 percent higher than in the year before. This rate should be maintained over several years.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Debt-to-asset ratio:</b> Debt should be 30 percent or less compared to assets.</p>\n</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2023-04-12T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":209426},{"headers":{"creationTime":"2023-01-06T22:01:56+00:00","modifiedTime":"2023-01-06T22:36:41+00:00","timestamp":"2023-01-07T00:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"Funds","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34296"},"slug":"funds","categoryId":34296}],"title":"Hedge Funds For Dummies Cheat Sheet","strippedTitle":"hedge funds for dummies cheat sheet","slug":"hedge-funds-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Learn about investing in hedge funds, including the power of diversification, hedging tools, and what you should ask fund managers.","noIndex":0,"noFollow":0},"content":"Hedge funds use pooled funds to focus on high-risk, high-return investments, often with a focus on shorting — so you can earn profit even when stocks fall.","description":"Hedge funds use pooled funds to focus on high-risk, high-return investments, often with a focus on shorting — so you can earn profit even when stocks fall.","blurb":"","authors":[{"authorId":9152,"name":"Ann C. Logue","slug":"ann-c-logue","description":" <b>Ann C. Logue</b> is a freelance writer and consulting analyst. She has written for <i>Barron&#8217;s,</i> the <i>New York Times, Newsweek Japan, Compliance Week,</i> and the <i>International Monetary Fund.</i> She&#8217;s a lecturer at the Liautaud Graduate School of Business at the University of Illinois at Chicago. Her current career follows 12 years of experience as an investment analyst. She has a BA from Northwestern University, an MBA from the University of Chicago, and she holds the Chartered Financial Analyst designation.","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9152"}}],"primaryCategoryTaxonomy":{"categoryId":34296,"title":"Funds","slug":"funds","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34296"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":198378,"title":"Hedge Fund Fees to Expect with Your Investment","slug":"hedge-fund-fees-to-expect-with-your-investment","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","funds"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/198378"}},{"articleId":198327,"title":"Types of Hedge Funds: Absolute-Return and Directional","slug":"types-of-hedge-funds-absolute-return-and-directional","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","funds"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/198327"}}],"fromCategory":[{"articleId":209064,"title":"Mutual Funds For Dummies Cheat Sheet","slug":"mutual-funds-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","funds"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209064"}},{"articleId":208448,"title":"Exchange-Traded Funds For Dummies Cheat Sheet","slug":"exchange-traded-funds-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","funds"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208448"}},{"articleId":199934,"title":"Introducing Basic Types of Hedge Funds","slug":"introducing-basic-types-of-hedge-funds","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","funds"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/199934"}},{"articleId":198378,"title":"Hedge Fund Fees to Expect with Your Investment","slug":"hedge-fund-fees-to-expect-with-your-investment","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","funds"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/198378"}},{"articleId":198372,"title":"How Does Standard & Poor’s 500 Index Work?","slug":"how-does-standard-poors-500-index-work","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","funds"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/198372"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282271,"slug":"hedge-funds-for-dummies","isbn":"9781119907558","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","funds"],"amazon":{"default":"https://www.amazon.com/gp/product/1119907551/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119907551/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119907551-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119907551/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119907551/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/hedge-funds-for-dummies-2nd-edition-cover-9781119907558-203x255.jpg","width":203,"height":255},"title":"Hedge Funds For Dummies, 2nd Edition","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><b><b data-author-id=\"9152\">Ann C. Logue</b></b> is a freelance writer and consulting analyst. She has written for <i>Barron&#8217;s,</i> the <i>New York Times, Newsweek Japan, Compliance Week,</i> and the <i>International Monetary Fund.</i> She&#8217;s a lecturer at the Liautaud Graduate School of Business at the University of Illinois at Chicago. Her current career follows 12 years of experience as an investment analyst. She has a BA from Northwestern University, an MBA from the University of Chicago, and she holds the Chartered Financial Analyst designation.</p>","authors":[{"authorId":9152,"name":"Ann C. Logue","slug":"ann-c-logue","description":" <b>Ann C. Logue</b> is a freelance writer and consulting analyst. She has written for <i>Barron&#8217;s,</i> the <i>New York Times, Newsweek Japan, Compliance Week,</i> and the <i>International Monetary Fund.</i> She&#8217;s a lecturer at the Liautaud Graduate School of Business at the University of Illinois at Chicago. Her current career follows 12 years of experience as an investment analyst. She has a BA from Northwestern University, an MBA from the University of Chicago, and she holds the Chartered Financial Analyst designation.","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9152"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;funds&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119907558&quot;]}]\" id=\"du-slot-63b8b63f715d8\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;funds&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119907558&quot;]}]\" id=\"du-slot-63b8b63f71e9f\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":0,"title":"","slug":null,"categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/"}}],"content":[{"title":"The power of diversification","thumb":null,"image":null,"content":"<p>The easiest and most powerful way to hedge a portfolio is through diversification. Hedge funds often seek out exotic assets to increase their variety of holdings. It works because asset performance is volatile; no asset consistently beats the market.</p>\n<p>The table below shows the top five performance asset classes over five years. Note how much the rankings change.</p>\n<table>\n<tbody>\n<tr>\n<td width=\"106\"><strong>2017</strong></td>\n<td width=\"106\"><strong>2018</strong></td>\n<td width=\"106\"><strong>2019</strong></td>\n<td width=\"106\"><strong>2020</strong></td>\n<td width=\"106\"><strong>2021</strong></td>\n</tr>\n<tr>\n<td width=\"106\">Emerging Markets Equity</td>\n<td width=\"106\">Cash and Equivalents</td>\n<td width=\"106\">Large Cap US Equity</td>\n<td width=\"106\">Small Cap US Equity</td>\n<td width=\"106\">Large Cap US Equity</td>\n</tr>\n<tr>\n<td width=\"106\">Developed Markets (ex US) Equity</td>\n<td width=\"106\">US Fixed Income</td>\n<td width=\"106\">Small Cap US Equity</td>\n<td width=\"106\">Large Cap US Equity</td>\n<td width=\"106\">Real Estate</td>\n</tr>\n<tr>\n<td width=\"106\">Large Cap US Equity</td>\n<td width=\"106\">High Yield Bonds</td>\n<td width=\"106\">Developed Markets (ex US) Equity</td>\n<td width=\"106\">Emerging Markets Equity</td>\n<td width=\"106\">Small Cap US Equity</td>\n</tr>\n<tr>\n<td width=\"106\">Small Cap US Equity</td>\n<td width=\"106\">Global Markets (ex US) Bonds</td>\n<td width=\"106\">Real Estate</td>\n<td width=\"106\">Global Markets (ex US) Bonds</td>\n<td width=\"106\">Developed Markets (ex US) Equity</td>\n</tr>\n<tr>\n<td width=\"106\">Global Markets (ex US) Bonds</td>\n<td width=\"106\">Large Cap US Equity</td>\n<td width=\"106\">Emerging Markets Equity</td>\n<td width=\"106\">Developed Markets (ex US) Equity</td>\n<td width=\"106\">High Yield Bonds</td>\n</tr>\n</tbody>\n</table>\n"},{"title":"Tools for hedging","thumb":null,"image":null,"content":"<p>Hedge fund managers have many techniques to maximize return for a given level of risk. Most fund managers use a combination of the tools I present in the following list,  so keep the list handy when interviewing a potential fund manager:</p>\n<ul>\n<li><strong>Derivatives — </strong>options, futures, and other investments that can help a fund decrease or increase its exposure to certain parts of the economy like interest rates, commodity prices, or stock market index values</li>\n<li><strong>Diversification</strong> <strong>— </strong>investing in a wide range of assets so that if one part of a portfolio isn’t doing well, another part can pick up the slack, and the overall return of the portfolio will be more consistent</li>\n<li><strong>Leverage — </strong>borrowing money to make an investment. This increases the potential return but also boosts the risk. The loan has to be repaid regardless of what happens.</li>\n<li><strong>Macro investing</strong> <strong>— </strong>betting on global trends, usually in interest rates, currencies, and economic changes</li>\n<li><strong>Short-selling — </strong>selling a security (often something that you don’t own)<strong> </strong>because you expect the price to go down. You borrow the security, sell it, and then buy it back (hopefully at a lower price) to repay the loan.</li>\n</ul>\n"},{"title":"Questions to ask a hedge fund manager","thumb":null,"image":null,"content":"<p>Below are a few important questions to ask a hedge fund manager when researching a particular fund to help you understand what it does and how its managers work:</p>\n<ul>\n<li>What’s your investment strategy? How do you plan to achieve alpha?</li>\n<li>Who works on the fund? What is their education and experience? How much money do they have invested in the fund?</li>\n<li>Who’s your prime broker? Your administrative services firm? Your auditor?</li>\n<li>What’s your value at risk? How much of your borrowing is overnight? What are your fund’s sources of risk?</li>\n</ul>\n"},{"title":"Knowing the modern Greeks","thumb":null,"image":null,"content":"<p>Mathematical explanations for the world mark modern finance, and wherever math is, you’re bound to see symbols and variables.</p>\n<p>You don’t need to know all of the equations that shape financial theory, but you’ll have a leg up if you know the Greek letters used to describe different sources of risk and return. Keep this list handy when investigating hedge funds:</p>\n<p><strong>Alpha:</strong> Investment return that’s different than you’d expect, given an investment’s beta, which is its exposure to market risk and return. In the hedge-fund world, alpha is used to describe the value that the fund manager adds and the extra return generated for the amount of risk that the fund takes.</p>\n<p>But remember, alpha can be negative, meaning that the fund manager subtracts value from the fund. Some researchers aren’t sure that alpha exists at all.</p>\n<p><strong>Beta:</strong> The amount of risk in the overall market portfolio. The market beta is 1, so an investment with a beta of more than 1 is riskier than the market as a whole. You’d expect the investment to return more than the market in an up year and less than the market in a down year.</p>\n<p>If beta is less than 1, the investment is less risky than the market, and if beta is negative, the investment moves in the opposite direction.</p>\n<p><strong>Delta: </strong>The percentage change in an investment. Delta is often used to describe how much an option changes in price when its underlying security changes in price.</p>\n<p><strong>Gamma: </strong>The rate of change in delta. Gamma is exposure to any change in price, positive or negative.</p>\n<p><strong>Sigma: </strong>Represents standard deviation, or the likelihood that any one number in a series — like a series of investment returns — will be different from the return that you expect. The higher the standard deviation, the greater the investment risk.</p>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Five years","lifeExpectancySetFrom":"2023-01-06T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":296619},{"headers":{"creationTime":"2016-03-27T16:50:17+00:00","modifiedTime":"2022-11-08T17:38:04+00:00","timestamp":"2022-11-08T18:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"Stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"},"slug":"stocks","categoryId":34298}],"title":"Stock Investing For Dummies Cheat Sheet","strippedTitle":"stock investing for dummies cheat sheet","slug":"stock-investing-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Make confident stock investments, familiarize yourself with online resources to help evaluate stocks, and find ways to protect your money.","noIndex":0,"noFollow":0},"content":"<figure style=\"margin: 0;\"><figcaption style=\"margin-bottom: 10px;\">Listen to the article:</figcaption><audio src=\"/wp-content/uploads/stock-investing-for-dummies-cheat-sheet.mp3\" controls=\"controls\"><a href=\"/wp-content/uploads/stock-investing-for-dummies-cheat-sheet.mp3\">Download audio</a></audio></figure>\r\n\r\n\r\nYou're investing in stocks — good for you! To make the most of your money and your choices, educate yourself on how to make stock investments confidently and intelligently, familiarize yourself with the online resources available to help you evaluate stocks, and find ways to protect the money you earn. Also, be sure to do your homework before you invest in any <a href=\"https://www.dummies.com/personal-finance/investing/stocks-trading/company-data-every-stock-investor-should-examine/\" target=\"_blank\" rel=\"noopener\">company's stock</a>.\r\n\r\n[caption id=\"attachment_270029\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-270029\" src=\"https://www.dummies.com/wp-content/uploads/stock-investing.jpg\" alt=\"stock investing\" width=\"556\" height=\"418\" /> © shutter_o/Shutterstock.com[/caption]","description":"<figure style=\"margin: 0;\"><figcaption style=\"margin-bottom: 10px;\">Listen to the article:</figcaption><audio src=\"/wp-content/uploads/stock-investing-for-dummies-cheat-sheet.mp3\" controls=\"controls\"><a href=\"/wp-content/uploads/stock-investing-for-dummies-cheat-sheet.mp3\">Download audio</a></audio></figure>\r\n\r\n\r\nYou're investing in stocks — good for you! To make the most of your money and your choices, educate yourself on how to make stock investments confidently and intelligently, familiarize yourself with the online resources available to help you evaluate stocks, and find ways to protect the money you earn. Also, be sure to do your homework before you invest in any <a href=\"https://www.dummies.com/personal-finance/investing/stocks-trading/company-data-every-stock-investor-should-examine/\" target=\"_blank\" rel=\"noopener\">company's stock</a>.\r\n\r\n[caption id=\"attachment_270029\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-270029\" src=\"https://www.dummies.com/wp-content/uploads/stock-investing.jpg\" alt=\"stock investing\" width=\"556\" height=\"418\" /> © shutter_o/Shutterstock.com[/caption]","blurb":"","authors":[{"authorId":9001,"name":"Paul Mladjenovic","slug":"paul-mladjenovic","description":" <p><b>James Maendel, BFA, AAMS, AIF, DACFP, </b>founded Maendel Wealth, an investment advisory firm. He has won the Five Star Wealth Management award for multiple years. <b>Paul Mladjenovic</b> is a national speaker, educator, author of <i>Stock Investing For Dummies, Currency Trading For Dummies</i> and other Dummies titles and runs RavingCapitalist.com. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9001"}}],"primaryCategoryTaxonomy":{"categoryId":34298,"title":"Stocks","slug":"stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":270748,"title":"The Tax Treatment of Different Investments","slug":"the-tax-treatment-of-different-investments","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/270748"}},{"articleId":270740,"title":"10 Investing Pitfalls and Challenges for 2020–2030","slug":"10-investing-pitfalls-and-challenges-for-2020-2030","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/270740"}},{"articleId":270718,"title":"The Yahoo! Finance Stock Screening Tool","slug":"the-yahoo-finance-stock-screening-tool","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/270718"}},{"articleId":221015,"title":"10 Ways to Profit in a Bear Market","slug":"10-ways-profit-bear-market","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/221015"}},{"articleId":220996,"title":"How to Use an ETF Screening Tool","slug":"use-etf-screening-tool","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/220996"}}],"fromCategory":[{"articleId":283116,"title":"10 Reasons Not to Invest in Marijuana Stocks","slug":"10-reasons-not-to-invest-in-marijuana-stocks","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283116"}},{"articleId":283111,"title":"11 Criteria for Choosing a Cannabis Investment","slug":"11-criteria-for-choosing-a-cannabis-investment","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283111"}},{"articleId":283105,"title":"Cannabis Investments: Risks Inherent in Momentum Investing","slug":"cannabis-investments-risks-inherent-in-momentum-investing","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283105"}},{"articleId":283098,"title":"Investing in Cannabis: Spotting Opportunities to Buy or Sell","slug":"investing-in-cannabis-spotting-opportunities-to-buy-or-sell","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283098"}},{"articleId":283089,"title":"Investing in Cannabis: The Bid-Ask Spread","slug":"investing-in-cannabis-the-bid-ask-spread","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283089"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282608,"slug":"stock-investing-for-dummies-6th-edition","isbn":"9781119660767","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"amazon":{"default":"https://www.amazon.com/gp/product/1119660769/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119660769/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119660769-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119660769/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119660769/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/stock-investing-for-dummies-6th-edition-cover-9781119660767-203x255.jpg","width":203,"height":255},"title":"Stock Investing For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><p><b>James Maendel, BFA, AAMS, AIF, DACFP, </b>founded Maendel Wealth, an investment advisory firm. He has won the Five Star Wealth Management award for multiple years. <b><b data-author-id=\"9001\">Paul Mladjenovic</b></b> is a national speaker, educator, author of <i>Stock Investing For Dummies, Currency Trading For Dummies</i> and other Dummies titles and runs RavingCapitalist.com.</p>","authors":[{"authorId":9001,"name":"Paul Mladjenovic","slug":"paul-mladjenovic","description":" <p><b>James Maendel, BFA, AAMS, AIF, DACFP, </b>founded Maendel Wealth, an investment advisory firm. He has won the Five Star Wealth Management award for multiple years. <b>Paul Mladjenovic</b> is a national speaker, educator, author of <i>Stock Investing For Dummies, Currency Trading For Dummies</i> and other Dummies titles and runs RavingCapitalist.com. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9001"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;stocks&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119660767&quot;]}]\" id=\"du-slot-636a995f179e9\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;stocks&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119660767&quot;]}]\" id=\"du-slot-636a995f1818d\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":170841,"title":"The 10 Most Important Points about Stock Investing","slug":"the-10-most-important-points-about-stock-investing","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/170841"}},{"articleId":170852,"title":"Checking Important Company Fundamentals before Investing in a Stock","slug":"checking-important-company-fundamentals-before-investing-in-a-stock","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/170852"}},{"articleId":170851,"title":"Financial Measures to Consider before Investing in a Stock","slug":"financial-measures-to-consider-before-investing-in-a-stock","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/170851"}},{"articleId":170850,"title":"A Mandatory Reading List for Stock Investors","slug":"a-mandatory-reading-list-for-stock-investors","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/170850"}},{"articleId":170845,"title":"Internet Resources for Stock Investing","slug":"internet-resources-for-stock-investing","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/170845"}},{"articleId":170842,"title":"Reassuring Points for Nervous Stock Investors","slug":"reassuring-points-for-nervous-stock-investors","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/170842"}}],"content":[{"title":"The 10 most important points about stock investing","thumb":null,"image":null,"content":"<p>If you&#8217;re committed to investing in stocks, keep the following points in mind as you make your choices and reap your rewards. After all, stock investing is fun and frightening, sane and crazy-making, complicated and simple — and you may need reminders to stay focused.</p>\n<ol class=\"level-one\">\n<li>\n<p class=\"first-para\">You&#8217;re not buying a stock; you&#8217;re buying a company.</p>\n</li>\n<li>\n<p class=\"first-para\">The primary reason you invest in a stock is because the company is making a profit and you want to participate in its long-term success.</p>\n</li>\n<li>\n<p class=\"first-para\">If you buy a stock when the company isn&#8217;t making a profit, you&#8217;re not investing — you&#8217;re <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/investing/investment-vehicles/stocks/the-differences-between-investing-trading-and-speculating-in-stock-168303/\" target=\"_blank\" rel=\"noopener\">speculating</a>.</p>\n</li>\n<li>\n<p class=\"first-para\">A stock (or stocks in general) should never be 100 percent of your assets.</p>\n</li>\n<li>\n<p class=\"first-para\">In some cases (such as a severe bear market, also known as a market with prolonged price declines), stocks aren&#8217;t a good investment at all. A bear market, however, may offer buying opportunities for profitable companies.</p>\n</li>\n<li>\n<p class=\"first-para\">A stock&#8217;s price is dependent on the company, which in turn is dependent on its environment, which includes its customer base, its industry, the general economy, and the political climate.</p>\n</li>\n<li>\n<p class=\"first-para\">Your common sense and logic can be just as important in choosing a good stock as the advice of any investment expert.</p>\n</li>\n<li>\n<p class=\"first-para\">Always have well-reasoned answers to questions such as &#8220;Why are you investing in stocks?&#8221; and &#8220;Why are you investing in a particular stock?&#8221;</p>\n</li>\n<li>\n<p class=\"first-para\">If you have no idea about the prospects of a company (and sometimes even if you think you do), use stop-loss orders or <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/investing/investment-vehicles/stocks/when-to-use-trailing-stops-for-your-investments-in-the-stock-market-168715/\" target=\"_blank\" rel=\"noopener\">trailing stops</a>.</p>\n</li>\n<li>\n<p class=\"first-para\">Even if your philosophy is to buy and hold stocks for the long term, continue to monitor your stocks and consider selling them if they&#8217;re not appreciating or if general economic conditions have changed.</p>\n</li>\n</ol>\n"},{"title":"Checking important company fundamentals before investing in a stock","thumb":null,"image":null,"content":"<p>Don&#8217;t underestimate the importance of a little detective work! Before you buy stocks, do some research on the companies you&#8217;re thinking of investing in. Pay attention to the following key components when you look at a company&#8217;s main financial statements (the <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/investing/investment-vehicles/stocks/introduction-to-income-statements-for-stock-investors-168795/\" target=\"_blank\" rel=\"noopener\">income statement</a> and the <a href=\"https://www.dummies.com/article/business-careers-money/personal-finance/investing/investment-vehicles/stocks/introduction-to-balance-sheets-for-stock-investors-168754/\" target=\"_blank\" rel=\"noopener\">balance sheet</a>):</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Earnings:</b> This number should be at least 10 percent higher than the year before.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Sales:</b> This number should be higher than the year before.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Debt: </b>This number should be lower than or about the same as the year before. It should also be lower than the company&#8217;s assets.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Equity:</b> This number should be higher than the year before.</p>\n</li>\n</ul>\n"},{"title":"Financial measures to consider before investing in a stock","thumb":null,"image":null,"content":"<p>You&#8217;re thinking of buying stock in a company, but before you invest your hard-earned money in hopes of a profitable return, check out some financial ratios that can help indicate whether the company is on sound financial footing. Here are key measures to consider:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Price-to-earnings ratio (P/E):</b> For large cap stocks, the ratio should be under 20. For all stocks (including growth, small cap, and speculative issues), it shouldn&#8217;t exceed 40.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Price-to-sales ratio (PSR):</b> The PSR should be as close to 1 as possible.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Return on equity (ROE):</b> ROE should be going up by at least 10 percent per year.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Earnings growth:</b> Earnings should be at least 10 percent higher than the year before. This rate should be maintained over several years.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Debt-to-asset ratio:</b> Debt should be half of assets or less.</p>\n</li>\n</ul>\n"},{"title":"A mandatory reading list for stock investors","thumb":null,"image":null,"content":"<p>Before buying stock in a company, you need to do a little light — or not-so-light — reading. Investing in stock without checking out the company beforehand is a recipe for disaster. So before you plunk down your money, be sure to read the following:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\">The company&#8217;s annual report</p>\n</li>\n<li>\n<p class=\"first-para\">The 10K and 10Q reports that the company files with the SEC</p>\n</li>\n<li>\n<p class=\"first-para\"><i>Standard &amp; Poor&#8217;</i><i>s Stock Reports</i></p>\n</li>\n<li>\n<p class=\"first-para\"><i>Value Line Investment Survey</i></p>\n</li>\n<li>\n<p class=\"first-para\"><i>The Wall Street Journal</i> and/or <i>Investor&#8217;</i><i>s Business Daily</i></p>\n</li>\n<li>\n<p class=\"first-para\">Reputable stock investing websites</p>\n</li>\n</ul>\n"},{"title":"Internet resources for stock investing","thumb":null,"image":null,"content":"<p>With the tools available on the internet, you have no excuse for not researching any and every potential stock investment. The following list of resources links you to some of the best financial websites around. Look at what they have to say about a company or an investment before you take the plunge.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><a href=\"http://www.bloomberg.com\" target=\"_blank\" rel=\"noopener\">Bloomberg</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.financialsense.com\" target=\"_blank\" rel=\"noopener\">Financial Sense</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.forbes.com\" target=\"_blank\" rel=\"noopener\">Forbes</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.kingworldnews.com\" target=\"_blank\" rel=\"noopener\">King World News</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.marketwatch.com\" target=\"_blank\" rel=\"noopener\">MarketWatch</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.mises.org\" target=\"_blank\" rel=\"noopener\">The Ludwig von Mises Institute</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.nasdaq.com\" target=\"_blank\" rel=\"noopener\">Nasdaq</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.sec.gov\" target=\"_blank\" rel=\"noopener\">The U.S. Securities and Exchange Commission</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.finance.yahoo.com\" target=\"_blank\" rel=\"noopener\">Yahoo! Finance</a></p>\n</li>\n</ul>\n"},{"title":"Reassuring points for nervous stock investors","thumb":null,"image":null,"content":"<p>With how crazy and volatile the world looks sometimes, it&#8217;s important to note that prudent investing isn&#8217;t just about what you invest <em>in</em> but also <em>how</em> you invest. If you want to build long-term wealth through stock investing and still be able to sleep at night, consider these points:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\">Invest in stocks of profitable companies that sell goods and services that a growing number of people want. Your stocks will zigzag upward.</p>\n</li>\n<li>\n<p class=\"first-para\">As long as you invest in stocks and exchange-traded funds (ETFs) with human &#8220;needs&#8221; (rather than &#8220;wants&#8221;) in mind, your long-term investing success will be more assured.</p>\n</li>\n<li>\n<p class=\"first-para\">If you keep your money diversified broadly across stocks, ETFs, mutual funds, and hard assets (such as real estate and precious metals) and keep adequate cash in the bank, you&#8217;ll be much safer in the long run.</p>\n</li>\n<li>\n<p class=\"first-para\">Keeping informed every day about your portfolio, the financial markets, and the general economy will keep you from the fear and anxiety that come from the unknown and the surprises that are inevitable.</p>\n</li>\n<li>\n<p class=\"first-para\">Being aware of investing tools and using them regularly (such as stop-loss orders and put options) gives you more control against the downside and more peace of mind.</p>\n</li>\n<li>\n<p class=\"first-para\">Keep a tight control on your debt and finances. In turn, this practice will ease the pressure to invest aggressively with a short-term focus and help you focus more on the longer term instead.</p>\n</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Six months","lifeExpectancySetFrom":"2021-06-29T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":208092},{"headers":{"creationTime":"2016-03-26T07:23:52+00:00","modifiedTime":"2022-10-06T15:48:23+00:00","timestamp":"2022-10-06T18:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"Commodities","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34292"},"slug":"commodities","categoryId":34292}],"title":"A Brief History of the Chicago Mercantile Exchange","strippedTitle":"a brief history of the chicago mercantile exchange","slug":"introducing-two-major-commodities-exchanges-chicago-board-of-trade-and-chicago-mercantile-exchange","canonicalUrl":"","seo":{"metaDescription":"Learn about the history of the Chicago Mercantile Exchange, including its merger with the Chicago Board of Trade in 2007.","noIndex":0,"noFollow":0},"content":"Established in 1848, the Chicago Board of Trade (CBOT) used to be the oldest commodity exchange in the world. The CBOT was the go-to exchange for grains and other agricultural products, such as oats, ethanol, and rice. The exchange also offered several metals contracts targeted at individual investors, including the mini gold and mini silver contracts.\r\n\r\nIn 2007, the Chicago Mercantile Exchange (CME) merged with the CBOT as part of a great consolidation wave. CME rolled up the CBOT's popular grain contracts and now offers them on its electronic platform. Many traders still refer to some of these contracts as CBOT grains.\r\n\r\nCME is the largest and most liquid futures exchange in the world. The CME has the heaviest trading activity — and open interest — of any exchange, partly because of the depth of its products offerings. Besides agricultural commodities, it trades economic derivatives (contracts that track economic data such as U.S. quarterly GDP and nonfarm payrolls), foreign currencies (it offers a broad currency selection, ranging from the Hungarian forint to the South Korean won), interest rates (including the London Inter Bank Offered Rate, the LIBOR), and even weather derivatives (contracts that track weather patterns in various regions of the world).\r\n<p class=\"Remember\">Because of its broad products listing, the CME is perhaps the most versatile of the commodity exchanges. In addition, the CME was one of the first exchanges to launch an electronic trading platform, the CME Globex, which became an instant hit with traders. It now accounts for more than 60 percent of the exchange's total volume. In 2006, the New York Mercantile Exchange (NYMEX) entered into an agreement with the CME to trade its marquee energy and metals contracts on <a href=\"https://www.cmegroup.com/globex.html\" target=\"_blank\" rel=\"noopener\">Globex</a>, an electronic trading system.</p>\r\nIn 2008, the CME went on a series of acquisitions and purchased the NYMEX and COMEX. The CME is also the first exchange to go public. Investors greeted the initial public offering with enthusiasm, raising the stock from $40 in 2003 to more than $500 in 2006. For more on the CME, check out its <a href=\"https://www.cmegroup.com/\" target=\"_blank\" rel=\"noopener\">website</a>, which also includes helpful tutorials on all its products.","description":"Established in 1848, the Chicago Board of Trade (CBOT) used to be the oldest commodity exchange in the world. The CBOT was the go-to exchange for grains and other agricultural products, such as oats, ethanol, and rice. The exchange also offered several metals contracts targeted at individual investors, including the mini gold and mini silver contracts.\r\n\r\nIn 2007, the Chicago Mercantile Exchange (CME) merged with the CBOT as part of a great consolidation wave. CME rolled up the CBOT's popular grain contracts and now offers them on its electronic platform. Many traders still refer to some of these contracts as CBOT grains.\r\n\r\nCME is the largest and most liquid futures exchange in the world. The CME has the heaviest trading activity — and open interest — of any exchange, partly because of the depth of its products offerings. Besides agricultural commodities, it trades economic derivatives (contracts that track economic data such as U.S. quarterly GDP and nonfarm payrolls), foreign currencies (it offers a broad currency selection, ranging from the Hungarian forint to the South Korean won), interest rates (including the London Inter Bank Offered Rate, the LIBOR), and even weather derivatives (contracts that track weather patterns in various regions of the world).\r\n<p class=\"Remember\">Because of its broad products listing, the CME is perhaps the most versatile of the commodity exchanges. In addition, the CME was one of the first exchanges to launch an electronic trading platform, the CME Globex, which became an instant hit with traders. It now accounts for more than 60 percent of the exchange's total volume. In 2006, the New York Mercantile Exchange (NYMEX) entered into an agreement with the CME to trade its marquee energy and metals contracts on <a href=\"https://www.cmegroup.com/globex.html\" target=\"_blank\" rel=\"noopener\">Globex</a>, an electronic trading system.</p>\r\nIn 2008, the CME went on a series of acquisitions and purchased the NYMEX and COMEX. The CME is also the first exchange to go public. Investors greeted the initial public offering with enthusiasm, raising the stock from $40 in 2003 to more than $500 in 2006. For more on the CME, check out its <a href=\"https://www.cmegroup.com/\" target=\"_blank\" rel=\"noopener\">website</a>, which also includes helpful tutorials on all its products.","blurb":"","authors":[{"authorId":9022,"name":"Amine Bouchentouf","slug":"amine-bouchentouf","description":" <p><b>Amine Bouchentouf</b> is a native Arabic speaker from Morocco. He helped launch a year&#45;round Arabic department at Middlebury College in Vermont, expanding upon the pre&#45;existing, well&#45;regarded Arabic Summer Program. He also designs, structures, and teaches beginner, intermediate, and advanced courses through the ABC Language Exchange Program in New York. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9022"}}],"primaryCategoryTaxonomy":{"categoryId":34292,"title":"Commodities","slug":"commodities","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34292"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":207438,"title":"<b>Investing in Commodities For Dummies</b><b> Cheat Sheet</b>","slug":"investing-in-commodities-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","commodities"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207438"}},{"articleId":140502,"title":"Top 6 Things in an Oil Company's Fleet","slug":"top-6-things-in-an-oil-companys-fleet","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","commodities"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/140502"}},{"articleId":140503,"title":"Introducing the New York Board of Trade","slug":"introducing-the-new-york-board-of-trade","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","commodities"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/140503"}},{"articleId":140501,"title":"What's the Deal with Peak Oil?","slug":"whats-the-deal-with-peak-oil","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","commodities"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/140501"}},{"articleId":140499,"title":"Making Money Using an Index","slug":"making-money-using-an-index","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","commodities"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/140499"}}],"fromCategory":[{"articleId":208627,"title":"Commodities For Dummies Cheat Sheet","slug":"commodities-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","commodities"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208627"}},{"articleId":207438,"title":"<b>Investing in Commodities For Dummies</b><b> Cheat Sheet</b>","slug":"investing-in-commodities-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","commodities"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207438"}},{"articleId":198903,"title":"Understanding the Real Risks behind Commodities","slug":"understanding-the-real-risks-behind-commodities","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","commodities"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/198903"}},{"articleId":198342,"title":"Risks with Investing in Commodities","slug":"risks-with-investing-in-commodities","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","commodities"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/198342"}},{"articleId":198341,"title":"The Role of Commodity Exchanges in Investment Trading","slug":"the-role-of-commodity-exchanges-in-investment-trading","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","commodities"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/198341"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282308,"slug":"investing-in-commodities-for-dummies","isbn":"9781119122012","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","commodities"],"amazon":{"default":"https://www.amazon.com/gp/product/1119122015/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119122015/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119122015-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119122015/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119122015/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/investing-in-commodities-for-dummies-cover-9781119122012-165x255.jpg","width":165,"height":255},"title":"Investing in Commodities For Dummies","testBankPinActivationLink":"","bookOutOfPrint":false,"authorsInfo":"<p><b data-author-id=\"9022\">Amine Bouchentouf</b> is a registered investment advisor, a member of the National Association of Securities Dealers, and a partner at Commodities Investors, LLC. A world-renowned market commentator, he has appeared on media in the US, the UK, France, the United Arab Emirates, and Brazil. </p>","authors":[{"authorId":9022,"name":"Amine Bouchentouf","slug":"amine-bouchentouf","description":" <p><b>Amine Bouchentouf</b> is a native Arabic speaker from Morocco. He helped launch a year&#45;round Arabic department at Middlebury College in Vermont, expanding upon the pre&#45;existing, well&#45;regarded Arabic Summer Program. He also designs, structures, and teaches beginner, intermediate, and advanced courses through the ABC Language Exchange Program in New York. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9022"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;commodities&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119122012&quot;]}]\" id=\"du-slot-633f17df4fe0a\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;commodities&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119122012&quot;]}]\" id=\"du-slot-633f17df50585\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Explore","lifeExpectancy":"Five years","lifeExpectancySetFrom":"2022-10-06T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":140505},{"headers":{"creationTime":"2016-03-26T07:13:33+00:00","modifiedTime":"2022-09-29T19:07:08+00:00","timestamp":"2022-09-29T21:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"Stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"},"slug":"stocks","categoryId":34298}],"title":"How Capital Gains Are Taxed","strippedTitle":"how capital gains are taxed","slug":"how-capital-gains-are-taxed","canonicalUrl":"","seo":{"metaDescription":"When you sell a stock held in a taxable account that has appreciated in value you usually have taxes to pay. Learn about these capital gains.","noIndex":0,"noFollow":0},"content":"People who invest online are usually do-it-yourself investors. This means they're probably working without a tax consultant. But this can make it hard to understand how the money they earn while investing is taxed. That's where understanding capital gains taxes enters the picture.\r\n\r\nWhen you sell a stock held in a taxable account that has appreciated in value, you usually have taxes to pay. Generally, such capital gains taxes are calculated based on the holding period. There are two holding periods:\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\"><b>Short-term:</b> That's the type of capital gain you have if you sell a stock after owning it for one year or less. You want to avoid these gains if you can because you're taxed at the ordinary income tax rate, which, as I explain shortly, is one of the highest tax percentages.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b>Long-term:</b> That's the type of capital gain result you get if you sell a stock after holding it for more than one year. These gains qualify for a special discount on taxes.</p>\r\n</li>\r\n</ul>\r\n<p class=\"Warning\">You must own a stock for over one year for it to be considered a long-term capital gain. If you buy a stock on March 3, 2019, and sell it on March 3, 2020 for a profit, that is considered a short-term capital gain. Also, an important thing to remember is that the holding-period clock starts the day after you buy the stock and stops the day you sell it. Selling even one day too soon can be a costly mistake.</p>\r\nIf you're interested in cutting your tax bill in a taxable account, you want to reduce, as much as possible, the number of stocks you sell that you've owned for only a year or less because they're taxed at your ordinary income tax levels. You can look up your ordinary income tax bracket at this <a href=\"http://www.irs.gov/pub/irs-pdf/i1040tt.pdf?portlet=3\" target=\"_blank\" rel=\"noopener\">Internal Revenue Service website</a>.\r\n\r\nNeed an example? Say a stock rose from $10 to $100 a share (for a $90 per share gain). Say that you had $50,000 in taxable income that year and sold the stock after owning it for just three months. Your gain would fall from $90 to $67.50 after paying $22.50 in taxes.\r\n\r\nBy owning stocks for more than a year, gains are taxed at the maximum capital gain rate. The rate you pay on long-term capital gains varies based on your normal tax bracket, but such rates are almost always much lower than your ordinary income tax rate, if not zero.\r\n\r\nYes, zero — some investors' long-term capital gains are tax free! Long-term capital gains rates, though, can change dramatically due to political pressure. The following table shows the maximum capital gain rates for 2009 and 2010 for typical investments such as stocks and bonds.\r\n<table><caption>Maximum Capital Gain Rate</caption>\r\n<tbody>\r\n<tr>\r\n<th>If Your Regular Tax Rate Is</th>\r\n<th>Your Maximum Capital Gain Rate Is</th>\r\n</tr>\r\n<tr>\r\n<td>Greater than 35%</td>\r\n<td>20%</td>\r\n</tr>\r\n<tr>\r\n<td>25% or higher</td>\r\n<td>15%</td>\r\n</tr>\r\n<tr>\r\n<td>Lower than 25%</td>\r\n<td>0%</td>\r\n</tr>\r\n</tbody>\r\n</table>\r\n<i>Source: </i><a href=\"http://www.irs.gov/publications/p17/ch16.html\" target=\"_blank\" rel=\"noopener\"><i>Internal Revenue Service</i></a>","description":"People who invest online are usually do-it-yourself investors. This means they're probably working without a tax consultant. But this can make it hard to understand how the money they earn while investing is taxed. That's where understanding capital gains taxes enters the picture.\r\n\r\nWhen you sell a stock held in a taxable account that has appreciated in value, you usually have taxes to pay. Generally, such capital gains taxes are calculated based on the holding period. There are two holding periods:\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\"><b>Short-term:</b> That's the type of capital gain you have if you sell a stock after owning it for one year or less. You want to avoid these gains if you can because you're taxed at the ordinary income tax rate, which, as I explain shortly, is one of the highest tax percentages.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b>Long-term:</b> That's the type of capital gain result you get if you sell a stock after holding it for more than one year. These gains qualify for a special discount on taxes.</p>\r\n</li>\r\n</ul>\r\n<p class=\"Warning\">You must own a stock for over one year for it to be considered a long-term capital gain. If you buy a stock on March 3, 2019, and sell it on March 3, 2020 for a profit, that is considered a short-term capital gain. Also, an important thing to remember is that the holding-period clock starts the day after you buy the stock and stops the day you sell it. Selling even one day too soon can be a costly mistake.</p>\r\nIf you're interested in cutting your tax bill in a taxable account, you want to reduce, as much as possible, the number of stocks you sell that you've owned for only a year or less because they're taxed at your ordinary income tax levels. You can look up your ordinary income tax bracket at this <a href=\"http://www.irs.gov/pub/irs-pdf/i1040tt.pdf?portlet=3\" target=\"_blank\" rel=\"noopener\">Internal Revenue Service website</a>.\r\n\r\nNeed an example? Say a stock rose from $10 to $100 a share (for a $90 per share gain). Say that you had $50,000 in taxable income that year and sold the stock after owning it for just three months. Your gain would fall from $90 to $67.50 after paying $22.50 in taxes.\r\n\r\nBy owning stocks for more than a year, gains are taxed at the maximum capital gain rate. The rate you pay on long-term capital gains varies based on your normal tax bracket, but such rates are almost always much lower than your ordinary income tax rate, if not zero.\r\n\r\nYes, zero — some investors' long-term capital gains are tax free! Long-term capital gains rates, though, can change dramatically due to political pressure. The following table shows the maximum capital gain rates for 2009 and 2010 for typical investments such as stocks and bonds.\r\n<table><caption>Maximum Capital Gain Rate</caption>\r\n<tbody>\r\n<tr>\r\n<th>If Your Regular Tax Rate Is</th>\r\n<th>Your Maximum Capital Gain Rate Is</th>\r\n</tr>\r\n<tr>\r\n<td>Greater than 35%</td>\r\n<td>20%</td>\r\n</tr>\r\n<tr>\r\n<td>25% or higher</td>\r\n<td>15%</td>\r\n</tr>\r\n<tr>\r\n<td>Lower than 25%</td>\r\n<td>0%</td>\r\n</tr>\r\n</tbody>\r\n</table>\r\n<i>Source: </i><a href=\"http://www.irs.gov/publications/p17/ch16.html\" target=\"_blank\" rel=\"noopener\"><i>Internal Revenue Service</i></a>","blurb":"","authors":[{"authorId":8949,"name":"Matt Krantz","slug":"matt-krantz","description":"","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/8949"}}],"primaryCategoryTaxonomy":{"categoryId":34298,"title":"Stocks","slug":"stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"}},"secondaryCategoryTaxonomy":{"categoryId":34300,"title":"General Investing","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":265694,"title":"Online Investing: Get More with a Discount Broker","slug":"online-investing-get-more-with-a-discount-broker","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265694"}},{"articleId":265687,"title":"Online Brokerage Firms: Deep Discounters","slug":"online-brokerage-firms-deep-discounters","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265687"}},{"articleId":265681,"title":"How to Find the Best Online Investment Broker for You","slug":"how-to-find-the-best-online-investment-broker-for-you","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/265681"}},{"articleId":207413,"title":"Online Investing For Dummies Cheat Sheet","slug":"online-investing-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207413"}},{"articleId":191948,"title":"How to Trade in Stocks Online","slug":"how-to-trade-in-stocks-online-2","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/191948"}}],"fromCategory":[{"articleId":283116,"title":"10 Reasons Not to Invest in Marijuana Stocks","slug":"10-reasons-not-to-invest-in-marijuana-stocks","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283116"}},{"articleId":283111,"title":"11 Criteria for Choosing a Cannabis Investment","slug":"11-criteria-for-choosing-a-cannabis-investment","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283111"}},{"articleId":283105,"title":"Cannabis Investments: Risks Inherent in Momentum Investing","slug":"cannabis-investments-risks-inherent-in-momentum-investing","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283105"}},{"articleId":283098,"title":"Investing in Cannabis: Spotting Opportunities to Buy or Sell","slug":"investing-in-cannabis-spotting-opportunities-to-buy-or-sell","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283098"}},{"articleId":283089,"title":"Investing in Cannabis: The Bid-Ask Spread","slug":"investing-in-cannabis-the-bid-ask-spread","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283089"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":281806,"slug":"online-investing-for-dummies-10th-edition","isbn":"9781119601487","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/1119601487/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119601487/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119601487-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119601487/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119601487/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/online-investing-for-dummies-10th-edition-cover-9781119601487-203x255.jpg","width":203,"height":255},"title":"Online Investing For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><p><b>Matt Krantz</b> is a nationally known financial journalist who specializes in investing topics. He&#39;s personal finance and management editor at <i>Investor&#39;s Business Daily.</i> He&#39;s also worked in the financial industry and covered markets and investing for <i>USA TODAY.</i> His writing on financial topics has also appeared in <i>Money</i> magazine, <i> Kiplinger&#39;s</i>, and <i>Men&#39;s Health</i>. Krantz is the author of <i>Fundamental Analysis For Dummies</i> and co&#45;author of <i>Investment Banking For Dummies.</i></p>","authors":[{"authorId":33279,"name":"Matthew Krantz","slug":"matthew-krantz","description":" <p><b>Matt Krantz</b> is a nationally known financial journalist who specializes in investing topics. He&#39;s personal finance and management editor at <i>Investor&#39;s Business Daily.</i> He&#39;s also worked in the financial industry and covered markets and investing for <i>USA TODAY.</i> His writing on financial topics has also appeared in <i>Money</i> magazine, <i> Kiplinger&#39;s</i>, and <i>Men&#39;s Health</i>. Krantz is the author of <i>Fundamental Analysis For Dummies</i> and co&#45;author of <i>Investment Banking For Dummies.</i> ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/33279"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;stocks&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119601487&quot;]}]\" id=\"du-slot-6336078f4b571\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;stocks&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119601487&quot;]}]\" id=\"du-slot-6336078f4bcfb\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"One year","lifeExpectancySetFrom":"2021-06-30T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":139171},{"headers":{"creationTime":"2016-03-26T15:29:31+00:00","modifiedTime":"2022-09-29T18:43:49+00:00","timestamp":"2022-09-29T21:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"Stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"},"slug":"stocks","categoryId":34298}],"title":"Stop-Loss Orders for Your Stock Investments","strippedTitle":"stop-loss orders for your stock investments","slug":"stop-loss-orders-for-your-stock-investments","canonicalUrl":"","seo":{"metaDescription":"A stop-loss order (also called a stop order ) is a condition-related order that instructs the broker to sell a particular stock in your investment portfolio onl","noIndex":0,"noFollow":0},"content":"<p>A <i>stop-loss</i> <i>order</i> (also called a <i>stop order</i>) is a condition-related order that instructs the broker to sell a particular stock in your investment portfolio only when the stock reaches a particular price. It acts like a trigger, and the stop order converts to a market order to sell the stock immediately.</p>\r\n<p class=\"Remember\">The stop-loss order isn’t designed to take advantage of small, short-term moves in the stock’s price. It’s meant to help you protect the bulk of your money when the market turns against your stock investment in a sudden manner.</p>\r\n<p>Say that your Kowalski, Inc., stock rises from $10 to $20 per share and you seek to protect your investment against a possible future market decline. A stop-loss order at $18 triggers your broker to sell the stock immediately if it falls to the $18 mark. If the stock suddenly drops to $17, it still triggers the stop-loss order, but the finalized sale price is $17.</p>\r\n<p>In a volatile market, you may not be able to sell at your precise stop-loss price. However, because the order automatically gets converted into a market order, the sale will be done, and you’ll be spared further declines in the stock.</p>\r\n<p>The main benefit of a stop-loss order is that it prevents a major loss in a stock that you own. It’s a form of discipline that’s important in investing in order to minimize potential losses. Investors can find it agonizing to sell a stock that has fallen. If they don’t sell, however, the stock often continues to plummet as investors hope for a rebound in the price.</p>\r\n<p class=\"Tip\">Most investors set a stop-loss amount at about 10 percent below the market value of the stock. This percentage gives the stock some room to fluctuate, which most stocks tend to do from day to day. If you’re extra nervous, consider a tighter stop-loss, such as 5 percent or less.</p>\r\n<p>Please keep in mind that this order is a trigger and a particular price is not guaranteed to be captured because the actual buy or sell occurs immediately after the trigger is activated. If the market at the time of the actual transaction is particularly volatile, then the price realized may be significantly different.</p>","description":"<p>A <i>stop-loss</i> <i>order</i> (also called a <i>stop order</i>) is a condition-related order that instructs the broker to sell a particular stock in your investment portfolio only when the stock reaches a particular price. It acts like a trigger, and the stop order converts to a market order to sell the stock immediately.</p>\r\n<p class=\"Remember\">The stop-loss order isn’t designed to take advantage of small, short-term moves in the stock’s price. It’s meant to help you protect the bulk of your money when the market turns against your stock investment in a sudden manner.</p>\r\n<p>Say that your Kowalski, Inc., stock rises from $10 to $20 per share and you seek to protect your investment against a possible future market decline. A stop-loss order at $18 triggers your broker to sell the stock immediately if it falls to the $18 mark. If the stock suddenly drops to $17, it still triggers the stop-loss order, but the finalized sale price is $17.</p>\r\n<p>In a volatile market, you may not be able to sell at your precise stop-loss price. However, because the order automatically gets converted into a market order, the sale will be done, and you’ll be spared further declines in the stock.</p>\r\n<p>The main benefit of a stop-loss order is that it prevents a major loss in a stock that you own. It’s a form of discipline that’s important in investing in order to minimize potential losses. Investors can find it agonizing to sell a stock that has fallen. If they don’t sell, however, the stock often continues to plummet as investors hope for a rebound in the price.</p>\r\n<p class=\"Tip\">Most investors set a stop-loss amount at about 10 percent below the market value of the stock. This percentage gives the stock some room to fluctuate, which most stocks tend to do from day to day. If you’re extra nervous, consider a tighter stop-loss, such as 5 percent or less.</p>\r\n<p>Please keep in mind that this order is a trigger and a particular price is not guaranteed to be captured because the actual buy or sell occurs immediately after the trigger is activated. If the market at the time of the actual transaction is particularly volatile, then the price realized may be significantly different.</p>","blurb":"","authors":[{"authorId":9001,"name":"Paul Mladjenovic","slug":"paul-mladjenovic","description":" <p><b>Ted Sudol </b>is a longtime affiliate marketer who has developed and sold several affiliate marketing websites over the years. His current sites focus on affiliate marketing and precious metals investing.</p><p><b>Paul Mladjenovic</b> is the bestselling author of <i>Stock</i> <i>Investing For Dummies</i>. He&#8217;s a Certified Financial Planner as well as a national speaker and home business specialist.</p> ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9001"}}],"primaryCategoryTaxonomy":{"categoryId":34298,"title":"Stocks","slug":"stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":270748,"title":"The Tax Treatment of Different Investments","slug":"the-tax-treatment-of-different-investments","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/270748"}},{"articleId":270740,"title":"10 Investing Pitfalls and Challenges for 2020–2030","slug":"10-investing-pitfalls-and-challenges-for-2020-2030","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/270740"}},{"articleId":270718,"title":"The Yahoo! Finance Stock Screening Tool","slug":"the-yahoo-finance-stock-screening-tool","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/270718"}},{"articleId":221015,"title":"10 Ways to Profit in a Bear Market","slug":"10-ways-profit-bear-market","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/221015"}},{"articleId":220996,"title":"How to Use an ETF Screening Tool","slug":"use-etf-screening-tool","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/220996"}}],"fromCategory":[{"articleId":283116,"title":"10 Reasons Not to Invest in Marijuana Stocks","slug":"10-reasons-not-to-invest-in-marijuana-stocks","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283116"}},{"articleId":283111,"title":"11 Criteria for Choosing a Cannabis Investment","slug":"11-criteria-for-choosing-a-cannabis-investment","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283111"}},{"articleId":283105,"title":"Cannabis Investments: Risks Inherent in Momentum Investing","slug":"cannabis-investments-risks-inherent-in-momentum-investing","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283105"}},{"articleId":283098,"title":"Investing in Cannabis: Spotting Opportunities to Buy or Sell","slug":"investing-in-cannabis-spotting-opportunities-to-buy-or-sell","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283098"}},{"articleId":283089,"title":"Investing in Cannabis: The Bid-Ask Spread","slug":"investing-in-cannabis-the-bid-ask-spread","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283089"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282608,"slug":"stock-investing-for-dummies-6th-edition","isbn":"9781119660767","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"amazon":{"default":"https://www.amazon.com/gp/product/1119660769/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119660769/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119660769-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119660769/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119660769/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/stock-investing-for-dummies-6th-edition-cover-9781119660767-203x255.jpg","width":203,"height":255},"title":"Stock Investing For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><b>Ted Sudol </b>is a longtime affiliate marketer who has developed and sold several affiliate marketing websites over the years. His current sites focus on affiliate marketing and precious metals investing.</p><p><b><b data-author-id=\"9001\">Paul Mladjenovic</b></b> is the bestselling author of <i>Stock</i> <i>Investing For Dummies</i>. He&#8217;s a Certified Financial Planner as well as a national speaker and home business specialist.</p>","authors":[{"authorId":9001,"name":"Paul Mladjenovic","slug":"paul-mladjenovic","description":" <p><b>Ted Sudol </b>is a longtime affiliate marketer who has developed and sold several affiliate marketing websites over the years. His current sites focus on affiliate marketing and precious metals investing.</p><p><b>Paul Mladjenovic</b> is the bestselling author of <i>Stock</i> <i>Investing For Dummies</i>. He&#8217;s a Certified Financial Planner as well as a national speaker and home business specialist.</p> ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9001"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;stocks&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119660767&quot;]}]\" id=\"du-slot-6336078f35068\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;stocks&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119660767&quot;]}]\" id=\"du-slot-6336078f357cc\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"One year","lifeExpectancySetFrom":"2022-09-29T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":168718},{"headers":{"creationTime":"2016-03-26T16:03:46+00:00","modifiedTime":"2022-09-15T15:16:58+00:00","timestamp":"2022-09-15T18:01:20+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"Bonds","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34291"},"slug":"bonds","categoryId":34291}],"title":"The Tax Risk in Bond Investing","strippedTitle":"the tax risk in bond investing","slug":"the-tax-risk-in-bond-investing","canonicalUrl":"","seo":{"metaDescription":"When comparing taxable bonds to other investments, it's important to consider the potentially high cost of taxation.","noIndex":0,"noFollow":0},"content":"Bond investing has a reputation for safety, not only because bonds provide steady and predictable streams of income, but also because as a bondholder you have first dibs on the issuer’s money. A corporation is legally bound to pay you your interest before it doles out any dividends to people who own company stock.\r\n\r\nIf a company starts to go through hard times, any proceeds from the business or (in the case of an actual bankruptcy) from the sale of assets go to you before they go to shareholders.\r\n\r\nHowever, bonds offer no ironclad guarantees. All investments carry some risk, such as tax risk. When comparing taxable bonds to other investments, such as stocks, some investors forget to factor in the potentially high cost of taxation.\r\n\r\nExcept for municipal bonds and bonds kept in tax-advantaged accounts, such as an IRA, the interest payments on bonds are generally taxable at your income-tax rate, which for most people is in the 25 to 28 percent range but could be as high as 35 percent . . . and, depending on the whims of Congress, may rise higher.\r\n\r\nIn contrast, stocks may pay dividends, most of which (thanks to favorable tax treatment enacted into law just a few years back) are taxable at 15 percent. If the price of the stock appreciates, that appreciation isn’t taxable at all unless the stock is actually sold, at which point, it’s usually taxed at 15 percent.\r\n\r\nSo would you rather have a stock that returns 5 percent a year or a bond that returns 5 percent a year? From strictly a tax vantage point, bonds lose. Paying even 25 percent tax represents a 67 percent bigger tax bite than paying 15 percent. (Of course — getting back to the whims of Congress — these special rates are also subject to change.)\r\n<p class=\"Warning\">Tax risk on bonds is most pronounced during times of high interest rates and high inflation. If, for example, the inflation rate is 3 percent, and your bonds are paying 3 percent, you are just about breaking even on your investment. You have to pay taxes on the 3 percent interest, so you actually fall a bit behind.</p>\r\nBut suppose that the inflation rate were 6 percent and your bonds were paying 6 percent. You have to pay twice as much tax as if your interest rate were 3 percent (and possibly even more than twice the tax, if your interest payments bump you into a higher tax bracket), which means you fall even further behind.\r\n\r\nInflation is not likely to go to 6 percent. But if it does, holders of conventional (non-inflation-adjusted) bonds may not be happy campers, especially after April 15 rolls around.","description":"Bond investing has a reputation for safety, not only because bonds provide steady and predictable streams of income, but also because as a bondholder you have first dibs on the issuer’s money. A corporation is legally bound to pay you your interest before it doles out any dividends to people who own company stock.\r\n\r\nIf a company starts to go through hard times, any proceeds from the business or (in the case of an actual bankruptcy) from the sale of assets go to you before they go to shareholders.\r\n\r\nHowever, bonds offer no ironclad guarantees. All investments carry some risk, such as tax risk. When comparing taxable bonds to other investments, such as stocks, some investors forget to factor in the potentially high cost of taxation.\r\n\r\nExcept for municipal bonds and bonds kept in tax-advantaged accounts, such as an IRA, the interest payments on bonds are generally taxable at your income-tax rate, which for most people is in the 25 to 28 percent range but could be as high as 35 percent . . . and, depending on the whims of Congress, may rise higher.\r\n\r\nIn contrast, stocks may pay dividends, most of which (thanks to favorable tax treatment enacted into law just a few years back) are taxable at 15 percent. If the price of the stock appreciates, that appreciation isn’t taxable at all unless the stock is actually sold, at which point, it’s usually taxed at 15 percent.\r\n\r\nSo would you rather have a stock that returns 5 percent a year or a bond that returns 5 percent a year? From strictly a tax vantage point, bonds lose. Paying even 25 percent tax represents a 67 percent bigger tax bite than paying 15 percent. (Of course — getting back to the whims of Congress — these special rates are also subject to change.)\r\n<p class=\"Warning\">Tax risk on bonds is most pronounced during times of high interest rates and high inflation. If, for example, the inflation rate is 3 percent, and your bonds are paying 3 percent, you are just about breaking even on your investment. You have to pay taxes on the 3 percent interest, so you actually fall a bit behind.</p>\r\nBut suppose that the inflation rate were 6 percent and your bonds were paying 6 percent. You have to pay twice as much tax as if your interest rate were 3 percent (and possibly even more than twice the tax, if your interest payments bump you into a higher tax bracket), which means you fall even further behind.\r\n\r\nInflation is not likely to go to 6 percent. But if it does, holders of conventional (non-inflation-adjusted) bonds may not be happy campers, especially after April 15 rolls around.","blurb":"","authors":[{"authorId":9023,"name":"Russell Wild","slug":"russell-wild","description":" <b>Russell Wild,</b> MBA, an expert on index investing, is a fee-only financial planner and investment advisor and the principal of Global Portfolios. 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Precious Metals Different Styles of Precious Metals Investing

Article / Updated 04-25-2023

Before you start investing or trading in precious metals, you need to understand the concepts of saving, investing, trading, and speculating; otherwise, the financial pitfalls could be very great. The differences aren't just in where your money is but also why and in what manner. Right now, millions of people live with no savings and lots of debt, which means that they are speculating with their budgets; retirees are day-trading their portfolios; and financial advisors are telling people to move their money from savings accounts to stocks without looking at the appropriateness of what they're doing. Make sure you understand the following terms — knowing the difference is crucial to you in the world of precious metals: Saving: The classical definition of saving is "income that has not been spent," but the modern-day definition is money set aside in a savings account for a "rainy day" or emergency. Ideally, you should have at least three months' worth of gross living expenses sitting blandly in a savings account or money market fund. Although precious metals in the right venue are appropriate for most people, including savers, you need to have cash savings in addition to your precious metals investments. A good example of an appropriate savings venue in precious metals is buying physical gold and/or silver bullion coins as a long-term holding. Investing: Investing refers to the act of buying an asset that is meant to be held long-term (in years). The asset will always run into ups and downs, but as long as it's trending upward (a bull market), you'll be okay. Investing in precious metals may not be for everyone, but it is an appropriate consideration for many investment portfolios. The common stock of large or mid-size mining companies is a good example of an appropriate vehicle for investors. Trading: Trading is truly short-term in nature and is meant for those with steady nerves and a quick trigger finger. There are many "trading systems" out there, and this activity requires extensive knowledge of market behavior along with discipline and a definitive plan. The money employed should be considered risk capital and not money intended for an emergency fund, rent, or retirement. The venue could be mining stocks, but more likely it would be futures and/or options because they are faster-moving markets. Speculating: This can be likened to financial gambling. Speculating means making an educated guess about the direction of a particular asset's price move. Speculators look for big price moves to generate a large profit as quickly as possible, but also understand that it can be very risky and volatile. A speculator's appetite for greater potential profit coupled with increased risk is similar to the trader, but the time frame is different. Speculating can be either short-term or long-term. Your venue of choice could be stocks, but more likely, the stocks would typically be of smaller mining companies with greater price potential. Speculating is also done in futures and options.

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Stocks Strategies for Investing in Cannabis Stocks

Article / Updated 04-25-2023

Momentum investors (speculators) lean toward technical analysis instead of fundamental analysis when choosing which stocks to buy, when to buy, and when to sell. Investors who rely on technical analysis spend most of their time looking at charts to spot patterns in an attempt to predict the future movement of a stock’s price. Upward momentum With momentum investing, you basically want to buy stocks that show sustainable upward momentum and sell them before the price starts to trend downward. The key word here is sustainable, which means you’re looking for a pattern that you have reason to believe will continue for the foreseeable future. One way to identify a stock with sustainable upward momentum is to look at its 50-day and 100-day simple moving averages in relation to one another. A simple moving average (SMA) shows the change in a stock’s average price over a certain number of days. For example, to calculate the five-day SMA of a stock for a given day, you total the stock’s closing prices over the past five days and divide by five. To calculate the 50-day moving average, you total the stock’s closing prices over the past 50 days and divide by 50. To create an SMA chart, you calculate the SMA for the desired period (for example, for each of the past 50 days) and plot those points on a chart, as shown. You end up with a line or curve that smooths out the daily fluctuations in the share price (which reduces the “noise”) to make the stock’s overall momentum clearer and easier to visualize and understand. The good news is that you don’t have to calculate simple moving averages and chart them. Nearly every online broker features moving average charts as part of its service. I explained how to calculate the SMA and create a chart just so you would have a clearer understanding of how this investment strategy works. As a momentum investor, you look for times when the short-term upward trend is strong enough to trigger a positive shift in the long-term trend. The most common way to spot such a shift is to chart a stock’s 50-day and 100-day moving averages and look for points where the two lines cross. When the 50-day SMA line moves from below to above the 100-day SMA line (see the following figure), this is a sign that the short-term trend may be strong enough to trigger an upward shift in the long-term momentum — a buy signal. However, if you look at enough of these moving averages charts, you start to notice that this technique doesn’t always work. You’ll notice plenty of instances where the 50-day SMA line moves from below to above the 100-day SMA line that corresponds with a sell-off. Likewise, you’ll notice plenty of instances where the 50-day SMA line dives down below the 100-day SMA line corresponds to an upward shift in share price. In other words, don’t blindly follow this technique. Momentum investors may examine the SMA over longer periods or use other types of charts to gauge a stock’s momentum and identify buy and sell opportunities, but this basic method enables you to wrap your head around the concept and try it if you so desire. Be careful buying into an apparent rally, because short sellers can quickly inflate a stock’s price when they exit their positions in anticipation that the stock price will soon tank. Downward momentum After buying a cannabis stock with upward momentum, your next decision is when to sell it. At this point, monitoring the stock’s SMA is even more important, because at any time in the future, the trend can flip from upward to downward. You want to sell your stock as close to the stock’s peak as possible, and as you feel comfortable doing. As is commonly said among investors, “Pigs get fat, and hogs get slaughtered.” Don’t be too greedy when deciding the right time to sell. If you’re unsure whether a stock has peaked, consider cashing out your principle (the initial amount you invested) and riding to the top with your gains (the remaining shares). As you become more familiar with cannabis stocks, you may want to consider taking bigger risks. Deciding when and how much to sell depends on your personal risk tolerance and how much you can afford to and want to gamble. Now, instead of looking for points where the 50-day SMA moves from below to above the line for the 100-day SMA, you want to watch for when that 50-day line crosses down from above to below the 100-day line (see Figure 13-3). How far that 50-day line dives down before you pull the trigger is up to you, but if you want to remain true to this strategy, the sooner you sell, the better.

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ETFs ETFs For Canadians For Dummies Cheat Sheet

Cheat Sheet / Updated 04-13-2023

An exchange-traded fund (ETF) is something of a cross between an index mutual fund and a stock. It’s like a mutual fund but has some key differences you’ll want to be sure you understand. Here, you discover how to get some ETFs into your portfolio, how to choose smart ETFs, and how ETFs differ from mutual funds.

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Stocks Stock Investing For Canadians For Dummies Cheat Sheet

Cheat Sheet / Updated 04-12-2023

Stock investing can be exciting, but it shouldn’t be a rollercoaster ride for Canadian investors. If you know how to read company reports and what financial measures to review, you’re more likely to pick a winning stock. Staying up to date on market conditions ensures you’ll know when it’s best to buy or sell.

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Funds Hedge Funds For Dummies Cheat Sheet

Cheat Sheet / Updated 01-06-2023

Hedge funds use pooled funds to focus on high-risk, high-return investments, often with a focus on shorting — so you can earn profit even when stocks fall.

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Stocks Stock Investing For Dummies Cheat Sheet

Cheat Sheet / Updated 11-08-2022

Listen to the article:Download audio You're investing in stocks — good for you! To make the most of your money and your choices, educate yourself on how to make stock investments confidently and intelligently, familiarize yourself with the online resources available to help you evaluate stocks, and find ways to protect the money you earn. Also, be sure to do your homework before you invest in any company's stock.

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Commodities A Brief History of the Chicago Mercantile Exchange

Article / Updated 10-06-2022

Established in 1848, the Chicago Board of Trade (CBOT) used to be the oldest commodity exchange in the world. The CBOT was the go-to exchange for grains and other agricultural products, such as oats, ethanol, and rice. The exchange also offered several metals contracts targeted at individual investors, including the mini gold and mini silver contracts. In 2007, the Chicago Mercantile Exchange (CME) merged with the CBOT as part of a great consolidation wave. CME rolled up the CBOT's popular grain contracts and now offers them on its electronic platform. Many traders still refer to some of these contracts as CBOT grains. CME is the largest and most liquid futures exchange in the world. The CME has the heaviest trading activity — and open interest — of any exchange, partly because of the depth of its products offerings. Besides agricultural commodities, it trades economic derivatives (contracts that track economic data such as U.S. quarterly GDP and nonfarm payrolls), foreign currencies (it offers a broad currency selection, ranging from the Hungarian forint to the South Korean won), interest rates (including the London Inter Bank Offered Rate, the LIBOR), and even weather derivatives (contracts that track weather patterns in various regions of the world). Because of its broad products listing, the CME is perhaps the most versatile of the commodity exchanges. In addition, the CME was one of the first exchanges to launch an electronic trading platform, the CME Globex, which became an instant hit with traders. It now accounts for more than 60 percent of the exchange's total volume. In 2006, the New York Mercantile Exchange (NYMEX) entered into an agreement with the CME to trade its marquee energy and metals contracts on Globex, an electronic trading system. In 2008, the CME went on a series of acquisitions and purchased the NYMEX and COMEX. The CME is also the first exchange to go public. Investors greeted the initial public offering with enthusiasm, raising the stock from $40 in 2003 to more than $500 in 2006. For more on the CME, check out its website, which also includes helpful tutorials on all its products.

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Stocks How Capital Gains Are Taxed

Article / Updated 09-29-2022

People who invest online are usually do-it-yourself investors. This means they're probably working without a tax consultant. But this can make it hard to understand how the money they earn while investing is taxed. That's where understanding capital gains taxes enters the picture. When you sell a stock held in a taxable account that has appreciated in value, you usually have taxes to pay. Generally, such capital gains taxes are calculated based on the holding period. There are two holding periods: Short-term: That's the type of capital gain you have if you sell a stock after owning it for one year or less. You want to avoid these gains if you can because you're taxed at the ordinary income tax rate, which, as I explain shortly, is one of the highest tax percentages. Long-term: That's the type of capital gain result you get if you sell a stock after holding it for more than one year. These gains qualify for a special discount on taxes. You must own a stock for over one year for it to be considered a long-term capital gain. If you buy a stock on March 3, 2019, and sell it on March 3, 2020 for a profit, that is considered a short-term capital gain. Also, an important thing to remember is that the holding-period clock starts the day after you buy the stock and stops the day you sell it. Selling even one day too soon can be a costly mistake. If you're interested in cutting your tax bill in a taxable account, you want to reduce, as much as possible, the number of stocks you sell that you've owned for only a year or less because they're taxed at your ordinary income tax levels. You can look up your ordinary income tax bracket at this Internal Revenue Service website. Need an example? Say a stock rose from $10 to $100 a share (for a $90 per share gain). Say that you had $50,000 in taxable income that year and sold the stock after owning it for just three months. Your gain would fall from $90 to $67.50 after paying $22.50 in taxes. By owning stocks for more than a year, gains are taxed at the maximum capital gain rate. The rate you pay on long-term capital gains varies based on your normal tax bracket, but such rates are almost always much lower than your ordinary income tax rate, if not zero. Yes, zero — some investors' long-term capital gains are tax free! Long-term capital gains rates, though, can change dramatically due to political pressure. The following table shows the maximum capital gain rates for 2009 and 2010 for typical investments such as stocks and bonds. Maximum Capital Gain Rate If Your Regular Tax Rate Is Your Maximum Capital Gain Rate Is Greater than 35% 20% 25% or higher 15% Lower than 25% 0% Source: Internal Revenue Service

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Stocks Stop-Loss Orders for Your Stock Investments

Article / Updated 09-29-2022

A stop-loss order (also called a stop order) is a condition-related order that instructs the broker to sell a particular stock in your investment portfolio only when the stock reaches a particular price. It acts like a trigger, and the stop order converts to a market order to sell the stock immediately. The stop-loss order isn’t designed to take advantage of small, short-term moves in the stock’s price. It’s meant to help you protect the bulk of your money when the market turns against your stock investment in a sudden manner. Say that your Kowalski, Inc., stock rises from $10 to $20 per share and you seek to protect your investment against a possible future market decline. A stop-loss order at $18 triggers your broker to sell the stock immediately if it falls to the $18 mark. If the stock suddenly drops to $17, it still triggers the stop-loss order, but the finalized sale price is $17. In a volatile market, you may not be able to sell at your precise stop-loss price. However, because the order automatically gets converted into a market order, the sale will be done, and you’ll be spared further declines in the stock. The main benefit of a stop-loss order is that it prevents a major loss in a stock that you own. It’s a form of discipline that’s important in investing in order to minimize potential losses. Investors can find it agonizing to sell a stock that has fallen. If they don’t sell, however, the stock often continues to plummet as investors hope for a rebound in the price. Most investors set a stop-loss amount at about 10 percent below the market value of the stock. This percentage gives the stock some room to fluctuate, which most stocks tend to do from day to day. If you’re extra nervous, consider a tighter stop-loss, such as 5 percent or less. Please keep in mind that this order is a trigger and a particular price is not guaranteed to be captured because the actual buy or sell occurs immediately after the trigger is activated. If the market at the time of the actual transaction is particularly volatile, then the price realized may be significantly different.

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Bonds The Tax Risk in Bond Investing

Article / Updated 09-15-2022

Bond investing has a reputation for safety, not only because bonds provide steady and predictable streams of income, but also because as a bondholder you have first dibs on the issuer’s money. A corporation is legally bound to pay you your interest before it doles out any dividends to people who own company stock. If a company starts to go through hard times, any proceeds from the business or (in the case of an actual bankruptcy) from the sale of assets go to you before they go to shareholders. However, bonds offer no ironclad guarantees. All investments carry some risk, such as tax risk. When comparing taxable bonds to other investments, such as stocks, some investors forget to factor in the potentially high cost of taxation. Except for municipal bonds and bonds kept in tax-advantaged accounts, such as an IRA, the interest payments on bonds are generally taxable at your income-tax rate, which for most people is in the 25 to 28 percent range but could be as high as 35 percent . . . and, depending on the whims of Congress, may rise higher. In contrast, stocks may pay dividends, most of which (thanks to favorable tax treatment enacted into law just a few years back) are taxable at 15 percent. If the price of the stock appreciates, that appreciation isn’t taxable at all unless the stock is actually sold, at which point, it’s usually taxed at 15 percent. So would you rather have a stock that returns 5 percent a year or a bond that returns 5 percent a year? From strictly a tax vantage point, bonds lose. Paying even 25 percent tax represents a 67 percent bigger tax bite than paying 15 percent. (Of course — getting back to the whims of Congress — these special rates are also subject to change.) Tax risk on bonds is most pronounced during times of high interest rates and high inflation. If, for example, the inflation rate is 3 percent, and your bonds are paying 3 percent, you are just about breaking even on your investment. You have to pay taxes on the 3 percent interest, so you actually fall a bit behind. But suppose that the inflation rate were 6 percent and your bonds were paying 6 percent. You have to pay twice as much tax as if your interest rate were 3 percent (and possibly even more than twice the tax, if your interest payments bump you into a higher tax bracket), which means you fall even further behind. Inflation is not likely to go to 6 percent. But if it does, holders of conventional (non-inflation-adjusted) bonds may not be happy campers, especially after April 15 rolls around.

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