TJP

Consider Stocks for Wealth Building

Byron A. Ellis

September 23, 2007

A stock, common or preferred, represents a claim on a corporation assets and earnings. It is represented by a stock certificate, often held electronically by a broker. A common stock represents residual interest in the corporation. A preferred stock has certain preferences relative to the common stock.

Some stocks, but no all, appreciate in value over time. It is this appreciation that benefits stockholders. However, stockholders do not know with certainty that a given stock will appreciate over time. Therefore, they risk their money on the success of the corporation that issued the stock. Nonetheless, since 1983 the Dow Jones Industrial Average (DJIA) has increased from 1,287 to a high of 14,000 in 2007.

Corporations issue stocks to raise capital. Individuals and groups supply the capital with the expectation that the corporation will be profitable. Buying and selling shares of stocks is an important component of the economy.

Buying and selling securities occurs in an organized exchange, such as the New York Stock Exchange, or in informal over-the-counter market. The over-the-counter market deals with securities not listed on the organized exchanges.

Organized security exchanges follow rigidly enforced rules. The Security Exchange Commission (SEC) subjects organized exchanges to registration requirements. The mission of the SEC is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

The SEC oversees the key participants in the securities market. It is primarily concern with promoting disclosure of important market-related information, maintaining fair dealing, and protecting against fraud.

Here are stocks to watch:

Gemstar-Tv Guide Intl Inc, sticker GMST (NASDAQ), trading at $6.80, is a leading media, entertainment and technology company.

Aurizon Mines Ltd, sticker AZK (AMEX), trading at $3.88, is an emerging Canadian gold producer.

Titan Intl Inc III, sticker TWI (NYSE), trading at $29.86, is a global supplier of wheel and tire assemblies for off-highway vehicles.

China Mobile Limited, sticker CHL (NYSE), trading at $72.50, is a Chinese telecommunication company with over 300 million subscribers.