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Some people like to impress women by showing up at some place where they can be seen with a learned and scholarly book. The hope is that some woman will see them with the book and think that they are well-read (of course, you do need to have seen it teach either something about what the book is about in case said attractive woman wants to talk about it). Well, if you really want to impress someone with how intelligent you are, why don't you try reading an annual report in public?

Not many people know how to read one. To most of us, these are just a bunch of uninteresting numbers. To the business types though, an annual report can be a great and efficient language with which to express the health of a company. You just need to look at a few numbers to see what a company is capable of.

But it isn't just reading an annual report that's an impressive feat – making one as a professional accountant working for a company, you'll find that it's a major challenge to build an annual report. It requires in-depth knowledge of how a company's finances work, it certainly needs a great deal of thought, too.

Who doesn't want to be rich? With some of us though, that desire to be rich gets the better of our sense of reason. We hear someone whisper something about some speculative investment, and like Kramer in Seinfeld, we can't resist. Most of the time though, we don't turn out as lucky is Kramer. At least, speculative investment opportunities are profitable for someone – the people running the investments.

Penny stocks have to be the most representative of these speculative investment entities. Penny stocks by definition, are stocks by small companies that are worth less than a dollar (the shares, not the companies). People buy them in the hope that if they could just get these investments to rise up in value by a dollar, and they will have doubled their money.

Not to completely knock penny stocks at all. Some very successful companies today started out as penny stocks. They remained that way until they became big enough to be listed on a major stock exchange. Blockbuster, the onetime successful video rentals company was once a penny stock. While it isn't always that idea did invest in these, you really have to know what you're doing. You really need able to read a balance sheet, do your research and analysis and so on. Not everyone knows how to do this.

Is there a lot to know about what junk bonds are? Isn't the name pretty self-explanatory? Well, that's not really how it works. “Junk”, when used in the context of finance, merely means “high-risk”. You could say that when you owe the credit card company the outstanding on your card, that to the company, it's a junk loan. It doesn't mean that they are sure that you won't pay. It just means that if you don't pay, there's pretty much nothing they can do about it, because there's no collateral involved.

Junk bonds often, may be a great deal. Just the way a credit card company has a great deal with the loan they hold over a person of high personal integrity such as yourself. The loan may technically be high risk. And so they'll charge high interest. But there really is no risk because they're dealing with a high integrity individual. There are plenty of junk bonds like this out there – where new companies with no long-term reputation but with reserves of skill, integrity and talent, will put bonds on the market.

Should you invest in junk bonds? Well, it entirely depends on what your research tells you about the company in question. You do get a higher rate of interest; if the company manages its affairs well, it's credit rating will improve and so will the absolute value of your bond; should the company go bankrupt, you'll get paid before the shareholders do; and the income through interest payments is likely to be pretty dependable.

To people who haven't really introduced themselves to how the investment markets work, the way the business channels keep talking about the S&P index or the Dow Jones Industrial Average can seem like some kind of a secret language. What are these indexes? More to the point, what is the Dow Jones, and what does it do?

To people who study the stock market or invest in it, indexes like the Dow Jones are benchmarks – bellwether numbers to go by.

What is the Dow Jones though? Let's start the story where it really starts – in 1882. Charles Dow, the editor of the Wall Street Journal, together with a couple of other friends in the financial analysis business, decided that people needed a kind of financial tool to help investors in the factories and industries of America keep track of how things were going with those businesses.

People love cheap shares. Buying them isn't expensive and there's always the chance that you'll hit it big somehow. How good an idea is it to buy penny stocks though in reality? Can these actually live up to the kind of possibilities people dream of?

Penny stocks are an actual category all by themselves. If you ask the SEC, they like to call these stocks low-priced speculative securities from tiny companies – stocks to sell at under a dollar – can get called this.

It is not ever a big deal when shares that you buy at $100 each go up to $101. The great thing about going with penny stocks is that there is always the possibility that some minor stock market fluctuation will double their value. It's easy for a one dollar stock to go up to two dollars. A one-dollar difference here can be a big deal. You will have doubled your money.

When you read an article on investing your money, you can just expect to see them tell you about investing in single stocks, one or the other. They tell you how this particular company is great in the energy sector and how that company’s great in tech. and so on. You have to wonder – are all these personal-finance writers such great followers of the stock market they should have information about one or the other individual buys in single stocks among the thousands out there?

Some of them actually do do that. But others just read around a lot and pass on the information they read. The thing is, they don't really feel responsible for what they're doing. They don’t realize that they're just encouraging you to put your money into something that they don’t really know about. What happens if their stock tip turns out to be bogus?

Well, they just wash their hands off the whole thing when you do that. They just gave you a tip – it was your responsibility to see how good the information was, they'll tell you. Follow their advice and invest in five or six single stocks, and you might as well go on and plonk all the money on five or six horses at the racetracks.

Most people who save for their retirement with annuities, pension plans or 401(k)s, usually choose to throw their lot in with basic and sensible investments – tax-advantaged long-term accounts. These accounts can be a sensible choice because they allow for great tax benefits. As wonderful as they can be for your retirement planning, there can be one little potential chink in the armor – if you're someone who has trouble sticking to a plan, you might take advantage of how they allow you to make withdrawals even before you retire. What do you do if you want a great investment opportunity for your retirement, that's also safe from your own prying hands? This where you learn about what are municipal bonds.

A municipal bond is a great way to get tax benefits on your retirement investments, and actually get some kind of access to your money when you really need it. They're great also because they offer you compound interest, and give you a great deal of liquidity.

So let's start at the basics. What are municipal bonds?

The way investment experts see it, the casual individual investor makes his biggest mistakes in the area of making up his mind whether to stay with his investments or to sell. Knee-jerk reactions are the bane of their investment existence. They'll buy after an investment has made its biggest gain, and they will sell after they've seen the biggest loss. Things can go the other way, too. They can sell just as the stock is about to rise, and they can refuse to sell as their shares plumb never-before-seen depths. Well, with at least this last investor mistake, there's something that can help. It's called the trailing stop loss order.

There are actually two kinds of stop loss order. You can tell your broker right when you buy a stock that you don't want to hang on to it if it goes below a certain level. A trailing stop loss order adds another feature to this kind of instruction that you give your broker.

With this order, you can tell your broker that there is no absolute level you want him to wait for. You can tell him that you want him to sell any kind your stocks if they should fall by a certain percentage, wherever the absolute level might be. If for instance, you bought your shares at $10 and you're happy that they rose to $50, you don't want to tell him to wait until they fall to $9 before he sells.

It's been three years since Bernie Madoff pleaded guilty to running the world's most ambitious Ponzi scheme ever, having defrauded investors of $65 billion. Funny how all those brilliant Wall Street types have for the longest time shown the greatest admiration for Madoff's genius. The Madoff Ponzi scheme was a clever trick run by an evil financial genius. But Ponzi schemes themselves are not uncommon.

Because most of the time, they run on such a small scale that they can evade the authorities. These schemes can be very complicated to run even when they're done a very small scale. A Ponzi scheme is different from a pyramid scheme – where the system involves getting victims to unknowingly sign on more targets.

A Ponzi scheme and the other hand is run by a single person who runs the whole show. They don't rely on investors down the line to rope in new people. The chief fraud who starts it all – Madoff in this case – ropes in new people his own, and uses their money to pay off everyone who came before him. So basically, enterprises like the Madoff Ponzi scheme will only work when there is an unlimited supply of new investors willing to believe in the spiel of the head fraud.

It isn't uncommon to hear of stock market analysts claiming that an investor can actually time the market so that he only ends up investing in the bull periods. They claim to use market timing strategies so that they can anticipate when the bull markets come around, buy then, and then sell when the bear market swings around. Can you really time the market like this and eliminate any chance of a loss?

Let's take a closer look at how market timing strategies work.

Most investors make some use of stock market indexes such as the S&P 500. The belief is that the hand-picked stocks listed on these indexes are somehow representative of all American stocks. Whatever direction the stocks in these indexes take, you can be sure that the rest of the market is going to follow those directions is that direction as well.

Over the last four years, the S&P 500 has fallen more than 12%. Whatever stocks you owned during this period, it's likely that they fell by about 12% too.

If you have invested in stocks in a publicly traded company, you might think that the only way you have of trading in them is to buy or sell them. But you're limited to these two only if you fail to consider the covered call option as a possibility.

The covered call option basically allows you to get a better income and to protect yourself from a falling market. But what is a covered call option at all?

A call option contract basically, is an agreement between a buyer of shares and a seller. Basically, with a call option contract, the buyer agrees to buy some shares by a certain date at a certain price. Now once such a contract is made up, it's considered a potential sale. The contract itself can be bought and sold depending on how valuable the shares of the company in question are.

Now there are two kinds of call options – the first is the naked call option (don’t snigger); the other is the covered call option.

When you're trying to structure an investment portfolio that you would like to see do something other than crash and burn, you need to pay a lot of attention to how much money you will put into each kind of investment. They call this portfolio asset allocation. Mutual fund managers actually charge hundreds of thousands of dollars in fees just to offer advice on how much money to put in each kind of investment. It's that big a deal.

It's a big deal because the savvy investor needs to understand how much risk each kind of investment presents. And then, he needs to balance one kind of risk against another until he’s attained some kind of optimal balance. You certainly need to be knowledgeable about how much risk everything involves.

What exactly do you need to know before you set up a portfolio asset allocation plan? Well, once you know what to do, it can be simple enough. Your first step would be to draw up an investment strategy.