How the Stock Market Really Works

by Gough, Leo

• ISBN13: 9780273626855
• ISBN10: 027362685X
• Format: Paperback
• Copyright: 1997-02-01
• Publisher: Ft Pr

Summary

"Modern and thorough, it will answer all the questions that investors might have." - Security & Investment Review Breaks through the mystique surrounding the City and how financial institutions work. Introduces the key players, instruments and markets and approaches each subject from your point of view. How the Stock Market Really Works: Discloses what goes on in the stock market and who gets rich Provides an overview of all the financial instruments and how they can work for you Shows you how to deal in the market yourself and avoid pit falls Discusses investment theories and strategies Shows you how to interpret financial advice and read between the lines of the financial press Uncovers stories of the big investment scandals Author : Leo Gough is a freelance journalist and bestselling author.

Table of Contents

Introduction	ix
The Guerrilla Investor	1	(20)
The `guerrilla' investor concept	3	(4)
Choosing a financial adviser	7	(1)
Gough's five golden rules for guerrillas	8	(1)
A little financial maths	9	(4)
Simple and compound interest	13	(8)
Shares	21	(32)
What are shares?	23	(2)
The London Stock Exchange	25	(1)
Stock Indices	26	(1)
The world's stock markets	27	(4)
Buying and selling shares	31	(2)
Unit trusts	33	(4)
Investment trusts	37	(1)
Personal Equity Plans (PEPs)	38	(11)
Choosing a broker	49	(1)
The Crest system	50	(3)
Bonds	53	(12)
Auctioning new issues	55	(1)
Gilts	55	(10)
The Life Cycle of a Company - From Launches to Liquidations	65	(22)
New issues	67	(1)
The offer for sale	67	(3)
For guerrilla investors - stagging and other points	70	(2)
Rights issues	72	(3)
Scrip issues	75	(1)
Takeover bids	75	(6)
When companies go bust	81	(6)
Banks	87	(18)
Money	89	(3)
Central banks	92	(2)
Types of bank	94	(5)
How banks lend to individuals	99	(6)
The Money Markets	105	(10)
Bills of exchange	107	(1)
Certificate of deposit	107	(1)
The discount market	108	(1)
The local authority markets	109	(1)
The inter-bank market	109	(1)
The finance house, inter-company and commercial paper markets	110	(1)
The certificate of deposit market	110	(1)
The Euromarkets	111	(4)
Investment Theories	115	(22)
Introduction	117	(1)
Winners	117	(1)
The Kondratiev wave	118	(2)
Technical analysis	120	(4)
Fundamental analysis	124	(2)
The efficient market theory	126	(1)
Risk	126	(2)
Modern portfolio theory	128	(3)
The capital-asset pricing model (CAPM)	131	(3)
The Garch theory	134	(1)
Chaos theory	134	(1)
Neural networks	135	(1)
Conclusion	135	(2)
Commodities, Futures and options-for Gamblers Only?	137	(20)
Commodities	139	(1)
Futures	139	(2)
Financial futures	141	(2)
The London International Financial Futues and Options Exchange (LIFFE)	143	(3)
US futures	146	(1)
Japanese futures	147	(1)
Futures in the main commodity-producing countries	147	(1)
Continental Europe	148	(1)
Other Far Eastern markets	148	(1)
Smaller futures markets	149	(1)
Options	150	(7)
Foreign Exchange	157	(18)
The Bretton Woods system	159	(1)
The Floating Exchange Rate system	159	(1)
The balance of payments and the black hole	160	(1)
The Euromarkets	161	(1)
The foreign exchange market	161	(7)
Predicting exchange rates	168	(1)
The effects of exchange rates on shares	169	(1)
The effects of exchange rates on bonds	170	(1)
The effects of exchange rates on cash	171	(1)
The speical drawing rights (SDR) of the IMF	171	(1)
The European Monetary System (EMS)	172	(1)
The future of the US dollar	172	(1)
The future of the Yen	173	(1)
Conclusion	173	(2)
Lloyd's of London	175	(20)
Introduction	177	(1)
Origins	177	(1)
Lloyd's' structure	178	(4)
How to become a Name	182	(3)
Open years	185	(1)
Excess of Loss (XOL)	185	(1)
The LMX spiral	186	(1)
Lloyd's in trouble	186	(5)
Is it worth being a Name?	191	(4)
Fraud and the Regulatory Bodies	195	(14)
Introduction	197	(1)
The regulators	198	(1)
The hard sell	199	(2)
Conning the law breakers	201	(1)
Insider trading - Michael Milken, Ivan Boesky and Dennis Levine	201	(8)
Overseas Investments	209	(10)
Introduction	211	(1)
Tax havens	212	(4)
Offshore trusts and companies - are they worth it?	216	(3)
Other Investments	219	(20)
Property	221	(6)
Collectibles	227	(3)
The Enterprise Investment Scheme (EIS)	230	(3)
Cash	233	(1)
Pensions	234	(1)
Investment linked to insurance	235	(2)
Other financial packages	237	(2)
Tax	239	(15)
Tax avoidance and tax evasion	241	(1)
Residence outside the UK	241	(2)
Income tax	243	(2)
Capital Gains Tax (CGT)	245	(2)
Inheritance Tax (IHT)	247	(3)
`Hidden' taxes	250	(1)
Trusts	250	(2)
Starting a company	252	(2)
Bibliography	254	(1)
Useful Addresses	255	(4)
Glossary of Terms	259	(10)
Index	269