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Of all the investment alternatives available, no investment gets more public attention than common stock. People from all walks of life watch the market’s ups and downs with emotional concern and enthusiasm. The market is sometimes considered a barometer for the mood of the economy.

The news media consistently uses the Dow Jones Industrial Average or the S&P 500 as an indicator of business health. One reason is that the raw numbers do not require in-depth explanations. Reporting market fluctuations is suitable to "sound bite" reporting.

WHAT STOCK PRICES TRULY INDICATE

Stock or equity investment represents the right to be a stockholder or owner in a corporation. As a business becomes incorporated, it sells shares to investors, who can be private or public. We are most aware of public investing through the secondary market that operates at the stock exchanges, such as the New York and American.

The equity market is available to every type of investor willing to assume some level of risk. You can be an active trader, a long-term capital gain investor or a conservative investor looking for dividends and growth to offset inflation.

We have seen bull markets (periods of rising stock prices) and bear markets (declining prices). Although the Great Depression is still fixed in some people’s memories, the market still has an appeal to young and old alike.

However, before investing in the market, an investor should have provided for a home, savings reserve, adequate life insurance and enough sources of income to cover the basic needs and wants in life, then develop a common stock investment program.

When investing in common stocks, the prudent investor realizes that it is just as important to sell at the right time as it is to purchase at the best time.

         Fair to excellent depending on the economy and psychology of the market place.

        Poor to good. Depending on price versus dividend or yield factor.

        Fair. Markets can be volatile

        Good. Most stocks are traded in a routine manner on a daily basis.

        Fair. Deferral of capital gains until sale of stock.

INVESTOR RISKS

Stock shares can be bought with minimum expense, but there are always sales charges for buying and selling. Stocks give an investor great leverage and can be used as collateral. Time and expertise in stock selection is needed in order to match the stock with the goals and objectives of the investor.

Securities offered through Sigma Financial Corporation. A registered broker/dealer. Member FINRA & SIPC.

Planning Services offered through Sigma Planning Corporation, a registered investment advisor.

Any information contained on this site does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser licensed in your state.

We do not offer legal advice. All information provided on this website is for informational purposes only and is not a substitute for proper legal advice. If you have legal questions, we recommend that you seek the advice of legal professionals.

IRS Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.

Asset allocation, diversification and rebalancing do not assure a profit or protect against loss in declining markets. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Past performance is no guarantee of future results.

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Last modified: 05/11/10