Ken Little - The Complete Idiots Guide to Stock Investing Fast-Track

by Ken Little

A member of Penguin Group (USA) Inc.

ALPHA BOOKS

Published by Penguin Group (USA) Inc.

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Copyright 2012 by Ken Little

All rights reserved. No part of this book may be reproduced, scanned, or distributed in any printed or electronic form without permission. Please do not participate in or encourage piracy of copyrighted materials in violation of the authors rights. Purchase only authorized editions. No patent liability is assumed with respect to the use of the information contained herein. Although every precaution has been taken in the preparation of this book, the publisher and author assume no responsibility for errors or omissions. Neither is any liability assumed for damages resulting from the use of information contained herein. For information, address Alpha Books, 800 East 96th Street, Indianapolis, IN 46240.

THE COMPLETE IDIOTS GUIDE TO and Design are registered trademarks of Penguin Group (USA) Inc.

ISBN: 978-1-61564-274-8
Library of Congress Catalog Card Number: 2012935357

14 13 12 8 7 6 5 4 3 2 1

Interpretation of the printing code: The rightmost number of the first series of numbers is the year of the books printing; the rightmost number of the second series of numbers is the number of the books printing. For example, a printing code of 12-1 shows that the first printing occurred in 2012.

Printed in the United States of America

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ALWAYS LEARNING

PEARSON

To my daughter Emma, an aspiring writer, who is a better writer now at age 15 than many adults. Heres hoping she writes a best-seller and can take care of her mother and me in my old age.

Investing in the stock market can seem like venturing to a foreign country where the inhabitants speak a language you dont understand. People are shouting numbers and terms that are meaningless to you. Screens flash, letters and numbers scroll across endlessly, and it seems to be utter chaos.

Welcome to Wall Street.

The world you see on cable television and buzzing around the internet is only part of the picture. This part of Wall Street is dedicated to stock market traders, and every market move up is cause for celebration and every move down cause for alarm.

The other part of Wall Street is quiet, calm, and logical. Its where you find long-term investors who buy great companies at great prices and let them build wealth over time. When you become a resident of this world, you realize that about 98 percent of the daily noise surrounding stocks is meaningless to long-term investors.

This book is for long-term investors and describes how you can identify, analyze, and buy great companies at great prices. Long-term investors buy companies, so most of your work will be valuing companies, not stocks. If analyzing a business seems impossible, not to worry. Thanks to the internet, virtually everything you need to analyze companies is free or available for a small price.

Is it easy to pick great stocks? No, it is not, but it is also not impossibly hard either. It takes work, patience, and an understanding of the process, which is where this book comes in. Ive boiled the process down to its essentials. When you understand the essentials, you are ready to begin. As you work through the process, you will gain confidence and learn more about the benefits of long-term investing.

Warren Buffett became a billionaire many times over by buying great companies at great prices and letting them make him rich over time. Will you make a billion dollars using this books essentials? Probably nothowever, if you do, remember who got you started. I do hope what you learn here helps you build an investment plan to reach your financial goals.

You might want to check out my two websites:

Stocks.about.com, where I write about investing in stocks

Yourmoneyin60seconds.com, where I write about investing in general

Fast-Track Extras

Throughout this book, you will find sidebars with extra information that will further your understanding of the topic at hand. They appear as follows:

DEFINITION

STOCK TIP