Investlist Faq-O-Matic :
Stock Trading
- The Motley Fool website has a good page
describing how to value a stock.
- A stock goes up if: someone chooses to sell a stock for more than the
current market price and someone else is willing to pay the increased price
for the stock. A stock goes down for the opposite reason.
- It is a loan against your stock portfolio, offerred by the broker. Say, for example, that you have a stock portfolio worth $20,000. If all the stock is marginable, you could get a loan up to 50% of your porfolio value ($10,000). If the value of your portfolio drops below 30% ($6,000), the broker may ask for the $10,000 loan back or may sell your securities until you're back at 50%. More details are available at the SEC site
Also see information on margin loans and buying a house. Another good article to read is the Fool article about saving tax on margin loan interest.
- First and foremost, our sincere sympathies that you aren't too thrilled with your current broker. Btw, if you are with Smith Barney, and are contemplating a change, then you aren't an exception. The investlist archives has its fair shares of complaints, gripes, vents against their lack of service.
The good news is that, switching your broker is free - you just have to ask for a DTC. A sample DTC form is available in HTMLand Word formats.
CEC has the contact information for Paine Webber and Smith Barney. While at the Stock Admin site, you may also want to check the section on transferring ESPP-acquired shares.
Note: The above applies only to ESPP. You do not have to switch your "options" from one broker to another. They are automatically sent to both brokers. So, long as you have an active account, you'll be able to exercise them from either location.
- See Cisco's internal Stock Admin site. The FAQ has a section on stock splits under "Miscellaneous".
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The general consensus is that you should sell your ESPP shares first. For the primary reason that in oder to generate the same amount of cash you'll need to part away with more options than ESPP shares. This eats into your potential for future earnings.
[Jeff Kinzli] Another way to look at it is that if the market tanks and you still own options, you're out nothing. But if the market tanks and you sold your options but still own your ESPP shares (which you paid for) you are out real money.
There could be exceptions though. One is of course that the options might be close to expiring. Or, even the fact that you might be contemplating switching companies.
Btw, Steven Huddart, Smeal College of Business, Penn State University, has an experimental calculator to evaluate the worth of stock options. It must be noted that not all on the Investlist have been sold on the logic though.
- See the Motley
Fool after hours FAQ and some information from
Schwab. You can watch after-hour trades at Island,
or by clicking "Real-Time Mkt" at quote.yahoo.com.
- Information known to someone that has not been announced in a public
forum such as a press release or tradeshow. To prevent an investigation,
it is often a good idea to refrain from any stock trades in any companies
that you have insider knowledge about when their officers are blocked (by
SEC rules) from trading -- typically around quarter-end financial reporting.
Stock Admin has a complete section dedicated to Insider
Trading.
- Mechanisms to allow you to bet the price will go down (instead of up).
A put is a way to temporarily freeze the value of your capital --
that is, provide insurance against a stock going down. The Motley
Fool site also has definitions.
The Investlist archives also has a few postings on the subject.
- Cisco’s policy is that Cisco personnel may not engage in any speculative transactions in Cisco securities, including engaging in short sales, engaging in transactions in put options, call options or other derivative securities, or engaging in any other forms of hedging transactions, such as collars or forward sale contracts because of the divergence it could create between objectives of employees and other shareholders.
Additional details at http://wwwin.cisco.com/legal/policiesGuide/insider-trading.html
- From http://www.sec.gov/enforce/comctr.htm:
- enforcement@sec.gov
SEC Division of Enforcement
Enforcement Complaint Center
Mail Stop 8-4
450 Fifth Street, N.W.
Washington, DC 20549
fax 202-942-9618
tel: 800-SEC-0330
- Note: Datek and Ameritrade merged recently, and have combined their
systems.
The consensus of investlist for online discount brokers is E*Trade has some problems (a stock split was not handled correctly), and Datek/Ameritrade is pretty good. While E*Trade has been labelled lousy; Schwab, and Datek fared well. None of the online brokers appears to be "perfect" though (able to handle really busy days with no problems, consistent fast trade execution, etc.).
CNNfn has an article comparing the top brokers. So does, Smart Money, Weiss Ratings Inc, JD Power and Keynote Systems from a transaction performance perspective.
- All of the major stock exchanges will stop all trading if market indexes
drop below certain thresholds. See this fool
article for details.
- The following web sites contain useful information about IPOs:
http://www.hoovers.com/global/ipoc/index.xhtml
http://cnnfn.com/1999/11/24/investing/q_iposforall/
http://www.ipomonitor.com/
http://www.ipohome.com/default.asp
http://biz.yahoo.com/ipo/
- Both index funds and exchange traded funds mimic some of the best known barometers of the stock market. The exchange traded funds (ETFs) are traded like individual stocks, on an exchange (all available offerings currently trade on the American Stock Exchange). They can be bought and sold throughout the trading day. They can also be sold short and bought on margin. In short, anything you might do with a stock, you can do with an ETF.
Index funds on the other hand, are the low cost funds offered by the investment firms like Vanguard. They are bought and exchanged just like you would any other mutual fund. They carry the same fees, benefits and penalties as imposed by the investment firms.
One thing to note is that since ETFs are equivalent to stock, they aren't usually good candidates for dollar-cost-averaging, as you'd be charged fees for each purchase. This is unlike the Index funds, where the fees are preset.
A few additional links of use are:
http://www.nasdaq.com/Structuredeq/nasdaq_etf_family.stm
http://www.vanguard.com/web/planret/AdvicePTIBAverageAndIndexes.html
http://www.morningstar.com/Cover/ETF.html
http://www.fool.com/60second/indexfund.htm
- Selling a stock and buying it back within 30 days is considered a "wash
sale". This treatment is pertinent for taxes as you cannot
declare a loss on a stock if you sell it and buy it back within 30 days.
It may be noted that the 30 day window applies across calandar years. For more information and see the article at the Fool site.
Btw, even if you don't actively trade in stocks, you might be impacted. Realize that ESPP sales (at a loss) if done within 30 days on either side of the start of new plan, will trigger a wash sale.
- When you make money on an investment, you pay tax on your gains.
This tax is normal income tax (typically around 30% or more) or capital
gains tax (20%). See Fairmark Press
for a detailed description.
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