Build Wealth in US Stocks: A Guide to Smart Investing

By Azhar ul Haque Sario

Book description

 

 

Ever felt like the stock market is this secret club with its own language and weird rules? Well, "Build Wealth in U.S. Stocks: A Guide to Smart Investing" is like the friendly tour guide who's going to show you all the cool stuff and explain everything in a way that actually makes sense.

&nb

• Language: English
• Publisher: Azhar ul Haque Sario
• Release date: Apr 29, 2024
• ISBN: 9798869347121

Azhar ul Haque Sario

The author is an accomplished MBA graduate, ACCA (knowledge level), investor, and seasoned research analyst who has pursued part-time courses at Oxford and Cambridge.

Book preview

Build Wealth in US Stocks

A Guide to Smart Investing

Azhar ul Haque Sario

Azhar ul Haque Sario

Copyright © 2024 Azhar ul Haque Sario

Copyright © 2024 by Azhar ul Haque Sario

All rights reserved

No part of this book may be reproduced, or stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without express written permission of the publisher.

Cover design by: Azhar ul Haque Sario

[e-mail]

Contents

Title Page

Copyright

Preface

Part I: Foundations

The Birth of the New York Stock Exchange (NYSE)

Key Milestones in U.S. Stock Market Regulation

Economic Events that Shaped the Market

Notable Figures in US Financial History

Chapter 2: How the Stock Market Works

Roles of Brokers, Exchanges, and Market Makers

Types of Orders (Market, Limit, etc.)

Short Selling and Margin Trading

Chapter 3: The Benefits of Stock Market Investing

Portfolio Diversification – Your Financial Safety Net

Inflation Hedge – Fight the Money-Shrinking Monster

Ownership in Innovative Companies – Grab a Piece of the Future

Chapter 4: Understanding Stocks

Dividends and Stock Splits – The Perks of Being a Shareholder

Key Financial Metrics (P/E ratios, EPS, etc.) – X-Ray Vision for Stocks

Part II:  Investment Strategies

Unlocking the Secrets of Financial Statements

The Secret Weapon: Understanding Competitive Advantage

Valuation Methods – Unlocking a Company's True Worth

Identifying Red Flags – Your Spidey Sense for Dodgy Investments

Chapter 6: Technical Analysis

Technical Indicators – Your Market X-Ray

Volume Analysis – Listening to the Market's Heartbeat

Combining Technical and Fundamental Analysis – Your Market Dream Team

Chapter 7: Investing for the Long Haul

The magic of compounding

Dollar-cost averaging

Diversification simple and engaging

Chapter 8: Alternative Approaches

Dividend Investing – Stocks with a Bonus

Sector Investing –  Zeroing In on What You Believe In

Socially Responsible Investing (SRI) – Investing with a Conscience

Part III: Advanced Tools and Techniques

Unlocking Company Secrets: A Guide to SEC Filings

Your Stock Market Safari Guides: Financial News & Analysis Websites

Stock Screeners: Your X-Ray Vision for the Stock Market

Investment Research Platforms: Your Stock Market Mission Control

Chapter 10: Understanding Share Classes

The rights and privileges associated with each class of share

How to match share classes with your investor personality

Think Like a Picky Eater at a Gourmet Pie Shop

Chapter 11: Evaluating Returns

The Secret Forces Behind Stock Prices

Realistic Return Expectations

The Risks of Chasing High Returns

Chapter 12: Risk Management and Safe Trading

Stop-Loss Orders – Your Stock Market

Understanding Market Volatility – From Wipeouts to Winning the Wave

Protecting Your Portfolio in Downturns

Part IV: Expanding Your Horizons

Calls, Puts, and Making Smart Bets

Options Strategies – Leveling Up Your Predictions

Introduction to Futures Contracts – Where Serious Bets are Made

Chapter 14: Investing in the Global Market

American Depository Receipts (ADRs)

Currency Exchange Considerations

Global Diversification Benefits

Chapter 15: Finding Your Trading Medium

Full-Service Brokers – Your Personal Finance Sidekick

Robo-Advisors – Let a Robot Handle Your Investments

Choosing the Right Platform – Your Mission Control for Investing

Chapter 16: The Investor Mindset

Controlling Emotions

The Psychology of Investing

Common Investing Mistakes

Part V:  Data-Driven Investing and Special Topics

Imagine Your Investments Run by a Robot Butler

Turning Data into Your Investing Psychic

Data: The Fuel That Powers Your Investing Engine

Limitations of Data Science – Where Even the Numbers Can Lie

Chapter 18: International Investor's Guide to the US Market

Tools Tailored for International Investors

Chapter 19: Case Studies of Success (and Failure)

Investing Adventures: Triumphs, Flops, and What You Gotta Learn

The Wisdom of the Winners (and the Losers)

Making This Knowledge Work for YOU

Chapter 20: The Future of the Stock Market

The New Faces of Investing: It's Not Your Granddad's Stock Market

The Wild West of Investing Needs a New Sheriff

Forget the Country Club: Investing is for Everyone Now

About The Author

Preface

Think of the stock market like a sprawling, ever-changing city. There's the thrill of towering successes, hidden side streets of unique opportunities, and the occasional pothole that sends you tumbling if you're not paying attention. It's a place where dreams take flight, and sometimes, crash and burn.

For years, the US stock market has been this whirlwind of opportunity –  a chance for anyone, not just Wall Street hotshots, to build something lasting, support the next big idea, and maybe even strike it rich while they're at it. But honestly, the whole investing thing can feel like trying to understand a foreign language…and one spoken at lightning speed.

Think of it as your survival guide to this exhilarating city. Whether you've been wandering the financial streets for years or are nervously peeking around the corner for the first time, this book aims to give you the map, the compass, and the insider tips you need to find your way.

We'll kick things off with a wild ride through the history of Wall Street – the legends, the landmark moments, and the times things got a little crazy. You'll get a crystal-clear picture of how the stock market actually functions, from those first IPO jitters to the mysterious dance of brokers and exchanges. We'll talk about why owning stocks is like buying tickets to the coolest lottery on Earth, where you get benefits even if you don't snag the jackpot.

Part I: Foundations

Chapter 1: The Origins of Wall Street

The Birth of the New York Stock Exchange (NYSE)

Picture this: it's the late 1700s in New York City, a time of bustling streets and big dreams. There's this group of sharp-dressed merchants and brokers who have a thing for meeting under a big old buttonwood tree on Wall Street. They're not just chatting about the weather; they're making deals, buying and selling pieces of companies – the whole foundation of the stock market.

Now, this wasn't some fancy Wall Street office like in the movies. It was literally under a tree! But these guys were determined. In 1792,  they got serious and signed what they called the Buttonwood Agreement. It wasn't Wall Street legal jargon – it was them saying, Okay, let's make some rules and get this market organized!

Of course, you can't trade stocks outside forever. When the weather got bad, they'd move the action into the nearest coffeehouse. Imagine the scene: the smell of coffee in the air, guys in fancy waistcoats huddled together, shouting out offers and bids – it must have been wild!

As the whole trading thing grew, there were fancy new buildings built just for the stock exchange.  But even as things got more official, that spirit they started with under the buttonwood tree never left. In 1863, in the middle of the Civil War of all things, it officially became the New York Stock Exchange – a powerhouse of finance was born. And hey, that building you always see in the news? That came later in 1903.

Key Takeaways

The NYSE didn't pop out of nowhere – it grew from the ground up. Traders turned an outdoor meeting spot into a global institution.

Trading used to be way more social! Think coffee shops, not computer screens.

Names and buildings change, but the drive to buy and sell stocks, that's been there from the start.

Key Milestones in U.S. Stock Market Regulation

Imagine the stock market as a giant playground. It's fun, there's potential for big wins, but without some rules, things can get messy real fast. That's where stock market regulation comes in – it's like hiring a bunch of referees to make sure everyone plays fair. Let's take a peek at how the rulebook got written over the years.

When Wall Street Was the Wild West

Back in the day, the stock market was a rough place. Companies could make outrageous promises to lure in investors, and guys in fancy suits could get rich on secret information while regular folks got burned. It wasn't exactly a level playing field, more like a high-stakes poker game where some players had all the aces hidden up their sleeves.

The Big Crash That Changed Everything

The party came to a screeching halt with the stock market crash of 1929. It wasn't just a bad day on Wall Street; this triggered the Great Depression. Suddenly, everyone realized the playground needed a serious makeover. The Wild West days were over; it was time for some law and order.

The SEC: Wall Street Gets a Sheriff

President Roosevelt wasn't playing around. He signed some major laws that created the Securities and Exchange Commission (the SEC). Think of them as the ultimate stock market sheriff, there to keep things honest and protect investors.

The New Playground Rules

The SEC came in and laid down the law:

Companies Gotta Be Honest: No more shady accounting or making up numbers. Companies had to tell the truth about their finances, good or bad.

Say Goodbye to Insider Trading: Those backroom deals where a select few got rich quick at everyone else's expense? Suddenly, that could land you in jail.

Keeping an Eye on Everyone: Even stockbrokers and the exchanges themselves had to follow stricter rules to make sure they weren't playing favorites.

Rules Keep Evolving

Of course, just like kids find new ways to bend the rules, Wall Street players and financial markets evolve. After big scandals or new ways of trading pop up, you can bet more regulations are right around the corner.

Sarbanes-Oxley Act (2002): Remember Enron and those big accounting scandals? This law cracked down on how companies keep their books to keep shady numbers from fooling investors.

Dodd-Frank Act (2010): The 2008 financial crisis was another wake-up call. This law threw a bunch of new rules at banks and those fancy financial inventions to try and prevent another meltdown.

Key Takeaways

Regulations aren't meant to shut the party down; they're there to make the stock market playground safer and fairer for everyone.

Big market meltdowns often mean big changes to the rulebook.

Think of the SEC as the no-nonsense referee of Wall Street.

While the rules have gotten better, there will always be clever folks trying to skirt them. It's why the regulators gotta stay on their toes!

Economic Events that Shaped the Market

Think of the stock market like a giant mood ring. It changes color with the world around it – wars, booms, busts, and everything in between.  Let's rewind the tape and see how some of the biggest ups and downs in history left their mark on the market.

War: A Mixed Bag of Fear and Opportunity

When war drums start beating, the stock market gets the jitters. Nobody likes uncertainty, and war brings a whole truckload of it. Investors often start panicking and selling everything in sight. But here's the twist: war can also mean big business for certain companies. Defense stocks suddenly look pretty hot as everyone needs weapons. Other industries might even get a boost from the war effort.

Example: World War II was a wild ride for the market. At first, it tanked when the war broke out, but then roared back when the U.S. jumped into the fight and factories kicked into overdrive.

Recessions: When the Market Catches a Cold

A recession is like the economy getting a nasty flu. Companies struggle to make money, people lose