A beginner in the stock market will have a million unanswered questions. He can't wait to learn from his own mistakes as mistakes tend to be quite costly when it comes to the stock market.

‘Everything You Wanted to Know about Stock Market Investing' is a book that guides lay-investors on the basics of stock market investing. From answering the question on ‘Why invest?' to understanding stock price moves in the market and charting out the process of equity investing, this will be a good handbook to amateur investors. There are numerous illustrations and numeric examples to explain equity investment concepts which make the whole learning exercise effortless.

The chapters that should not be skipped are the ones on portfolio monitoring, cost factor and corporate actions. These sections ply on subjects that lay investors are generally ignorant. Stock picking technique is hard to come by but the thumb rules given in this book will be of help.

The book (priced at Rs 499) is published by Network 18 publications and Kotak Securities Limited.

Investing process

Getting started with equity investments takes a bit of running around, first to know facts and then to get things done. This book makes the first step easy. It lists out the process in detail - from choosing a broker to the process of opening a demat account. Reputation, service, accessibility and cost, the book says, should be the criteria for selecting a broker as also the depository participant (DP) who holds the demat account.Knowing the cost of a trade is essential for engaging in profitable trade and the book gives in fine points this information. Brokerage, service tax, securities transaction tax, turnover tax and stamp duty are the charges that are levied both while buying and selling a stock irrespective of whether one makes a profit/loss in the transaction.

Action to follow

Corporate actions such as issue of bonus shares, split in face value of shares, merger of business, etc. result in change of the number of securities held by the shareholder. An investor should keep track of some dates here: Record date, is the cut-off date for determining the list of shareholders who are entitled for the benefit of the corporate action. Ex-date is the date from which securities are traded without a right to the holder for the benefit of the corporate action. While cash dividends declared come to the shareholder as a credit to his bank account, the securities arising out of non-cash corporate actions get credited to the shareholder's demat account. The issuer takes the requisite details from the depository directly (it is important that you provide accurate details of the bank account to the DP).

Portfolio monitoring

While the book explains the various approaches to investing - value investing, growth investing and contrarian investing, it also delves into the importance of monitoring the portfolio. The book discusses various parameters that can be checkpoints to the investor to know how a company's performance has been over a period. Interpretation of the numbers in a company's accounts is dealt in a clear and straight way. The book also emphasises that investors should track the development related to the stock and also keep track of developments in the industry to which the stock belongs, its competitors and developments in the capital market.

The 21st chapter that comes as a round up to the book puts the basic thumb rule for equity investing in a nutshell:“A long-term commitment, following discipline in investment and decisions based on company fundamentals are essential aspects of successful equity investment.”

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