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Introduction - Pg. viii

viii Introduction The current explosion of the stock market is unprecedented by any period in its history. Since the 1980s, the number of American households that own common stock has risen from below 20 percent to just under half. And, this does not include households that hold stock within their retirement plans or other indirect means. A significant portion of this growth is a direct result of the proliferation of information available to the public through such new forums as the Internet. Any information without explanation, however, is useless. As a result, many people view the stock market as the domain of number crunchers who speak in a foreign language and do things the average person couldn't begin to understand. This lack of understanding often leads the person on the street into the arms of a financial professional to man- age his or her money. This in itself is not necessarily bad. Many people, however, are surprised to discover that with a minimum of effort, they can become fully qualified to handle their investments themselves, much as they handle their other finances. In addition, people who have hired someone to manage financial matters for them place themselves in a particularly vulnerable position if they do not have even the most rudimentary understanding of how their money is being managed. That's where this book comes in. The major aim of this book is to explain the basics of stock market investing in language that is understandable to the reader. To that extent, this book is full of com- parisons to other everyday situations, anecdotes, personal experiences, and even strange-but-true facts to keep you interested as you make your way through the wonderful world of personal invest- ing. Like a map, this book will guide you through the investing maze while giving you a heads-up for the things you should pay particular attention to, ignore, or use to determine your own level of interest. This book is not intended to be a textbook nor a comprehensive reference, but rather to give you more than sufficient information to get started as an investor. That in itself has proven time and time again to be enough to whet the average investor's appetite to know more. Good luck to you, and happy investing. Extras There are many things to learn before investing in the stock market. Use the vital information in the chapters to guide you in your investment decisions. Scattered throughout the pages are sidebars with useful information, definitions of financial terms, helpful tips, and cautions to help you handle your investments. Plain English This sidebar defines investing terms and basic concepts. Tip Here you'll find tips on how to make investment decisions. Caution Take these sidebars seriously--they help you avoid investing mistakes.