Wall Street Steward Blog

Reader Questions - March-May

Recently I realized that I had not written a “reader questions” entry in quite some time.  After finding out that the last one was posted in February, my urge to write became a calling.

Not all questions can be answered.  If the question involves a specific investment or your personal financial situation, a phone call is a better medium for us to use.

How can I tell if a stock is listed on the New York Stock Exchange or the NASDAQ? -Norris P.

A good rule of thumb is that if the symbol for the stock is 3 letters or fewer, it is NYSE4 letters or more, NASDAQ.  There are exceptions to this, as there is with almost anything in the financial business, but in general, this is a good rule.  GE = NYSE and AAPL = NASDAQ

If you want to be SURE about where it is traded, go here and type in the symbol.

My child is interested in investing, what books/resources would you recommend?
-I forgot

The “Rich Dad, Poor Dad” book was very good, but it is general and it led to a string of self-promotion that will not end.  The book is worth a read, but they can keep the coaching….there is no such thing as “choosing to be rich.”

I also like “Understanding Wall Street” by Jeffrey Little.  It was written several years back, but has been updated recently and does a good job of explaining the basics.

Other than those, I prefer the free websites like Yahoo Finance and MSN Investor.

What is the rule of 72?
-Sarah H.

The rule of 72 is an industry method used to determine the length of time it takes an investment to double.  It is NOT 100% perfect, but is surprisingly accurate.

The formula involves dividing 72 by the expected annual rate of return for an investment.  For example, if you believe that your money will earn 7% per year, it would take 10.3 years to double in value (72/7).  Think you will earn 10% per year, then it will only take 7.2 years to double (72/10).

For the exact figures, look here.  It is amazing how precise this simple formula is.

DISCLOSURE: The rule of 72 is a mathematical concept and does not guarantee investment results nor functions as a predictor of how an investment will perform. It is an approximation of the impact of a targeted rate of return. Investments are subject to fluctuating returns and there is no assurance that any investment will double in value.

I keep getting these annual reports sent to my house, along with proxy voting information.  I do not care to receive any of this information, and I would like to opt out of these.  How can I do that?
-Tom G.

You can’t. If you own an individual stock, the underlying company is required to mail you an annual report.  I know it is a pain, and I know it can be annoying, but the fact is that they must comply with the law.

Proxy information is important.  If you own stock, then you OWN a portion of the company.  As an owner, you have voting rights.  Most people have no interest in getting on an airplane and flying to Palo Alto, CA to vote on the Google Board of Directors.  If that sounds like you, you can vote by a “proxy” which means you do not have to get on the airplane.  In reality, the list of names will be littered with people you know nothing about, but still….if you choose to, you can vote on who you want to be on the Board.

Why were you out of the office so much in May?

HaHaHa! Good question.  The 3 days in mid-May, I was attending a Program Managers Conference so that one was business related.  I got a few good ideas that I plan to implement.

The last week of May (and first few days of June), I was on my annual family vacation.  I work hard, and I play HARDER.  It is a personal policy of mine that I spend a lot of time with my family, and that includes a one week vacation once a year.  This is a non-negotiable for me.

Also, when I am gone, I am always accessible through e-mail (mgriffin@ftinvestment.org) and I have a wonderful assistant named Catherine that can help with many issues.

I think we shall close on that note.

Thank you for reading, and please send in one of your own questions.  You might just see your question end up in a future post!

Creative Commons License photo credit: Micky.!