NEW TO FINANCIAL MARKETS: DECIMAL PRICING (FINANCIAL FOCUS)

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

If you weren't all that good in math at school, then you probably have never really liked the way the stocks are priced -- in fractions of a dollar, rather than dollars and cents. To make it more confusing, most stocks generally trade in increments of one-sixteenth of a dollar, and some stocks are even offered in increments of sixty-fourths.

These numbers can be a bit hard to deal with. If that's the case with you, then you'll be glad to know that the Securities and Exchange Commission (SEC) has ordered U.S. securities markets to begin quoting securities prices in decimals. Starting in July, 30 to 40 stocks will be quoted in dollars and cents, according to plans issued by the securities industry. If all goes well, by early August, all stocks would make the switch, although quotes would be priced in increments of no less than 5 cents. By early October, the 5 cents limitation would be removed and stocks could be quoted in penny increments.

When decimal pricing is completely phased in, you should find it much easier to understand stock prices. For example, a stock that trades today at $4 3/4 would be quoted at $4.75. This change also should make it simpler for you to compare prices of different stocks.

If stock quotes eventually get priced in 1-cent increments, you also may benefit in another way. This penny-pricing system could narrow the "spread" the difference between the best buying price and the best selling price for a stock. Consequently, you may find it easier to buy a stock at the price you want to pay.

Of course, decimal pricing, by itself, really shouldn't change the way you invest. You still need to find stocks of companies that have strong economic fundamentals, competitive products and a clear plan for future growth. And you also need to diversify your holdings among a variety of different stocks. This need for diversification has become even more apparent with the stock market's recent turmoil, in which the technology sector was particularly hard-hit. By spreading your investment dollars among many stocks. In many stocks, in many different sectors, you should be able to minimize losses affecting just one area -- while giving yourself more opportunities for success.

Although decimal pricing won't affect your choice of investments, it should be a positive step in the actual mechanics of constructing a well-diversified portfolio. And, from a psychological viewpoint, dollars-and-cents pricing should take some of the complexity out of the investment process.

So, get ready for a new way of looking at the stock market. It's time for decimal pricing -- a simple idea in a sometimes complex world.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.