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Introduction

The investing system is among the most highly complex systems that exist because there are so many variables and strange constants. It seems easy to understand the simplicity of it all, as buyers and sellers meet in a market. And based upon this, prices are created and money is exchanged. But the numerous variables that play a large part, as well as the unknown or unexpected events and happenings that can occur, can in seconds devastate a position or lead to wealth.

Combine this with the crowdlike movement of the participants, the information flows that influence variables, and government action or lack of action, and it can get pretty confusing. There are even unpredictable natural events thrown in.

But it can all be understood by any ordinary person. The Handy Investing Answer Book question-and-answer format helps readers break down the investing tree into its essential branches, twigs, and leaves. Most likely, one can garner some tiny piece of information that may greatly help with financial decision making.

Fear, and the movement of investors as a result of their perceptions of the markets, news, or variables that may impact a stock, category, or economy, plays a big role in determining how successful an investment will be, both in the short and long term. Your time horizon—whether you are investing for the long term or you are interested in making a rather short-term gain—may determine what the best strategy is, the approach to take, and the risk you are willing to bear. Depending on how you look at an investment, your overall performance may be greatly different.

This book does not go into a great deal of depth into a few areas of investing that are quite complex and outside its scope: technical analysis, options and futures trading, day trading, hedge funds, currency trading, and derivatives can even be tough for professionals to excel in. Instead, I try here to cover the most essential areas of investing and give mention to other areas with the hope that you will learn more about other investing subjects separately if you wish to explore them in greater depth. The Handy Investing Answer Book will take you through a logical progression of questions and answers to provide you context, definitions, and explanations so that you may make better-informed investment decisions.

I hope you enjoy it.

—Paul A. Tucci