Annotated Bibliography: Stock Market Investing Restrictions Paper

Abell, Howard, Robert Koppel, and Ken Johnson. The Sixth Market. Chicago: Dearborn Trade, 2000. This very interesting book asks several redundant, but key questions about investing in general. It breaks down into three basic sections the criteria that one needs to learn in order to become a good investor. I will include these points in my paper in analyzing what it takes to be proficient in the art of securities trading. This discussion will help me to transition into a major thesis tie-in about how learning before doing invariably helps any investor with the patience and inclination to to find ultimate success in the market.
Carreon, Charles. "Mutual Funds." 401KInvestor.Net: Charles Carreon's Simple Guide To Investing. 9 Apr 2007 . Carreon’s many web pages outline the basics of investing, and this page in particular summarizes the origin of mutual funds. He does however write about how ignorant investors are best investing in mutual funds. This complements my argument that ignorant people should leave the handling of their money to other, more knowledgeable individuals. I will reference Carreon’s article when I write about people that cannot handle the stress involved with trading, or who make excuses for not learning how to trade.
Goodchild, John, and Clive Callow. Double Takes. Chichester, England: John Wiley and Sons Ltd, 2000. These two authors examine in great detail the many broad categories of knowledge that is crucial to learn in becoming successful in the market. These authors agree with my assessment that a regulatory body with established academic guidelines is a must in today’s world of rampant online investing. I will use their detailed explanations of financial subtopics to supplement what The Sixth Market, above, has even more broadly defined.
Seeto, Brandon C W. The Psychology of Electronic Trading. Singapore: John Wiley and Sons (Asia) Pte Ltd, 2004. The author talks about the most common mistakes that newbie traders make. He analyzes the false expectations they have, in addition to a brief discussion on what any investor should know before trading online. His analysis of common trading errors will add greatly to my overall argument that newbie investing is much too dangerous, and should not be allowed. I plan to cite his statistics regarding the shockingly high number of people that lose money when they first begin investing; this, of course, is assuming they have no knowledge or experience about the money markets.
Thomsett, Michael C. Mastering Online Investing. Chicago: Financial Publishing, Inc., 2000. Thomsett examines the psychological aspects of online investing. He speaks from a standpoint of rationality in saying that calmness and coldness with regard to the market are key ingredients to making any investor successful. The author also makes several revelations about opportunity and risk being ultimately joined together in any decision a person makes, and how that theory is only magnified by the phenomenon of online investing. I will include Thomsett’s connections in my analysis of how, with the advent of online trading, the risks of investing have been shifted from the broker side of the trade directly to the independent investor side. I. Don’t let them invest online without being a professional (Insert Thesis Here)
A. Introduction
1. Historical background relating to trading
2. Remark on technological change making e-trading possible
3. Insert modified thesis
B. Required Information
1. Cover terms reader might not know: Series 7, 63, market, etc
2. Mention securities my argument will include (all types)
3. Note conventional wisdom on stock market
4. Discuss traditional, paper-trading, market psychology
C. Structure of Functioning
1. Historical information concerning traditional market structure
i. Open-cries on the exchange floor
ii. Broker assistance required for almost everything
2. Talk about how this has changed with the creation of the internet
3. Reflect how market psychology has changed over the past few decades with the advent of e-trading, transfer of liability from broker to individual
D. Justifications for Examinations
1. Reasons/statistics that support the implementation of a testing procedure and regulating body, either publicly or privately operated
2. Concessions surrounding proposed method
E. Examination Explanation, in Detail
1. Series 7, Series 63 style, but not as extensive as CFA
i. Accounting, business finance, and analysis of economic data will help with fundamental analysis approach
ii. Statistical Forecasting, most common technical indicators
iii. Analysis Strategy, applied trading method
iv. Understanding and control of self, rationality
v. Sentimental analysis training- understanding the psychology of market participants
2. Three criteria for success: where, how, what to trade
i. Passing exam will mean you’re much more prepared
ii. Knowing the above areas will give you preparation
F. Considerations
1. Distractions, keyboard accidents, gut feelings, cockiness, and cold, rational view of the market
2. Excuses for not learning to trade
3. Some people can’t handle the pressure, should consider seeking professional help with investment objectives
G. Conclusion: It’s Too Dangerous
1. Obviously, the risks are infinite and many
2. It’s too easy to make a mistake, people shouldn’t be trusted
3. Passing exam doesn’t exempt you from making mistakes, just makes you less ignorant and less likely to make a mistake


Introduction:
“It has been estimated that almost 95 percent of today’s online traders do not really know how to trade” (Abell, Koppel, and Johnson, The Sixth Market, 30). With the digitalization of almost every aspect of money markets today, first time and ignorant investors have an unlimited ability to drain their savings accounts in mere seconds. Because investors no longer have to place stock market orders through licensed brokers, they themselves now wield the power and ability to manage every facet of their assets. With added control, however, comes greatly increased risk as well. Since online investors are not constantly monitored and regulated to a great extent, it is very easy for them to invest, and many times lose, vast amounts of money. This happens predominantly to those investors who do not have any training in, experience with, or knowledge of, monetary instruments used in the online money markets of today. Thus, in order to combat senseless and ignorant online trading, investors wishing to manage their own assets in online trading environments should be required to pass an examination that certifies they possess a reasonable amount of knowledge in the field.