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Get Started in Shares

Book Description

Investing can be fun as well as rewarding.  It could certainly earn you much more than you could gain by sticking your money in a bank account. It really does not require much to make money from the stock market - just an understanding of a few simple concepts and the following of a few rules.


Written by the UK’s most successful writer on investing, Get Started in Shares explains in very clear and simple terms what shares are, how they are traded and what to look out for as an owner of shares.


 This is a straight-talking guide to the mysteries of investing that assumes no prior knowledge and will build up your understanding of investing in a series of easy steps.


Table of Contents

  1. Cover
  2. Title page
  3. Contents
  4. Dedication
  5. Acknowledgements
  6. Publisher’s acknowledgements
  7. About the author
  8. List of acronyms
  9. Preface
  10. 1 The thrill of owning shares
    1. Imagine being the owner of some great companies
    2. How to become a millionaire
    3. Returns over the decades
    4. International comparison
    5. Comparing the returns on other investments
  11. 2 Businesses and shares
    1. What is a share?
    2. Why do we need shares?
    3. The value of joint stock enterprises: a little history
    4. Over in Britain
    5. Partnerships and liability
    6. Directors are not the same as owners
    7. Some more on ordinary shares
    8. Stocks and shares
    9. It’s easy to create shares
    10. Authorised, issued and par values
    11. Public, private and listed
    12. No right to vote
    13. Parents and groups
    14. Primary versus secondary markets
  12. 3 What you receive from the company
    1. A flow of cash income
    2. How much is paid?
    3. When do I get paid?
    4. Don’t worry about sharp share moves on ex-div day
    5. Downloading data on dividends for a company
    6. Dividend yield
    7. Understanding the tables in The Financial Times
    8. Price-earnings ratio
    9. Tax is deducted before you get the dividend
    10. Capital gains (and losses)
    11. Share buy-backs and special dividends
    12. Perks
  13. 4 What do stockbrokers do?
    1. They are not that posh anymore
    2. Types of broker
    3. Setting things up with a broker
    4. Execution-only (or dealing-only) service
    5. Advisory dealing service
    6. Discretionary service
    7. Choosing a stockbroker
    8. Instructions and instructions
    9. Ways of paying for your shares
    10. Internet dealing
    11. Transferring shares without brokers
  14. 5 What happens once you have decided to trade?
    1. Older ways of trading
    2. Quote-driven trading
    3. Order-driven trading
    4. So which system is best?
    5. Clearing
    6. Settlement
    7. Alternatives to SETS
    8. After the deal
    9. The advanced stuff – direct market access
  15. 6 What do stock markets do?
    1. A worldwide phenomenon
    2. Shifts in stock exchanges
    3. A fair market
    4. The main benefits of a well-run stock exchange
    5. The London Stock Exchange (LSE)
    6. The London Stock Exchange primary market
    7. The secondary markets
    8. The Alternative Investment Market (AIM)
    9. PLUS
  16. 7 Sifting out the important stuff on the internet
    1. What the company puts out
    2. Newspaper websites
    3. Financial websites
    4. Financial website navigation, step by step
    5. Director’s dealings
    6. Trading online: So how do you actually buy or sell online?
  17. 8 Preference, foreign and golden shares
    1. Preference shares
    2. Overseas shares
    3. Golden shares
  18. 9 What drives share prices?
    1. Business is business, regardless of scale
    2. A multiplicity of factors
    3. Economic growth
    4. GDP
    5. Inflation and interest rates
    6. Export potential and currency shifts
    7. Change in the industry
    8. Government actions
    9. Social trends
    10. The anticipation machine
    11. Don’t do the following
  19. 10 Assessing a company
    1. Investors versus speculators
    2. Assessing an industry
    3. Competitive resource analysis
    4. The TRRACK system
    5. Quality of management
  20. 11 Profits and balance sheets
    1. The future is the focus, the past gives us clues
    2. Profit and loss account
    3. Balance sheet
    4. Chairman’s statement
    5. Chief executive’s review
    6. Directors’ report and business review
    7. Auditors’ report
    8. Five-year summary
    9. Trading statements
  21. 12 Cash flow and key ratios
    1. Cash flow statement
    2. Example of a profitable company forced into liquidation
    3. Key ratios and measures
    4. Watch out for managers raising profit!
  22. 13 Measuring risk
    1. The greatest risk of all
    2. Diversification – the nearest thing to a free lunch in investing
    3. Volatility
    4. Correlation
    5. Beta and alpha
    6. Some more types of risk
    7. Great investors’ views on risk
  23. 14 Companies selling shares to outsiders
    1. Can be good, but be cautious
    2. The sponsor
    3. The prospectus
    4. Finding out about new issues
    5. Underwriting
    6. The role of the corporate broker
    7. Methods of flotation
    8. How does an AIM flotation differ from one on the Official List?
    9. After flotation
  24. 15 Seasoned equity offerings
    1. Rights issues
    2. Illustration of a rights issue
    3. Nonsense spoken about the discounted price
    4. Other equity issues
    5. Splits and consolidations
  25. 16 Stock market indices
    1. How are indices calculated?
    2. The major UK market indices
    3. Venturing abroad – international indices
    4. Other important indices
  26. 17 Taxation
    1. Stamp duty
    2. Tax on dividends
    3. Capital gains tax (CGT)
    4. Individual savings accounts (ISAs)
    5. Personal pensions
    6. Tax benefits of investing in AIM companies
    7. Be a cheerful giver: get the taxman to give away money too!
  27. 18 Regulation of the markets
    1. Scams
    2. Another share scam
    3. UK regulation
    4. The Financial Conduct Authority (FCA)
    5. Be reassured, but take precautions
  28. Index
  29. Imprint