How The Stock Market Works.jpg
 

Reviewed by Sarah Ell

New Zealanders have long memories, and many Kiwis who experienced the 1987 stock-market crash are still wary of share trading. However, with house prices booming and residential property investment returns being squeezed, buying shares is becoming a more popular option once again.

Published in 2002, British writer Michael Becket’s guide to the stock market has been updated. The sixth edition explains to investors what is being traded and how, who does what with whom, and how to evaluate a particular share or bond when conflicting claims are being made about it.

The guide starts with the what and why of shares, bonds and securities, then looks at derivatives and foreign shares. It looks at how to pick shares, and the tricks and analysis the professionals use to choose the more likely winners.

Becket also outlines how to gather information and advice about companies trading on the market, and the concept of investment clubs.

Becket is an experienced financial journalist – having worked as The Daily Telegraph’s small-business editor – and has an easy-to-understand, non-technical writing style. The ins and outs of share-market investing are explained in layperson’s terms, and there’s a useful glossary.

Caution is still advised. Becket writes: “Anyone who tells you the stock market is an absolute doddle, and money for old rope, is either a con man or a fool.”

However, he says that those who are prepared to take the trouble to learn the language, do some research, and think carefully about what they want and how much they are prepared to pay for it, can still do well.

The sections on tax are heavy with British references, and some information isn’t relevant to New Zealand. But plenty of useful information is still contained in the book for local investors looking to dip their toes into the share market.