Here’s what I tell people: There’s only 4 words you really need to know to understand the stock market.
Long = Buy
Short = Sell
Bullish = You think the price will go up
Bearish = You think the price will go down
Those 4 words help you understand most of what you hear in financial reports.
- You may come across the term “selling short” – that basically means you are “borrowing” the stock. When you sell short – you are hoping that the price goes down so you can replace the stock for a lower cost.
When looking to invest, you don’t have to buy stocks. Stocks are risky but also have a lot of upside potential. Stocks are used for growth. (Whereas bonds are used for safety/income generally.)
Stock Market basics:
- Risk = Reward
- Buy Low, Sell High
- Always diversify
- Don’t put money in the market if you can’t afford the risk
- Remember, the stock market is like gambling. If you are prone to addiction, please be careful!
Some other types of funds:
Mutual funds – offer diversifcation but you end up paying fees. Also Mutual funds are priced at the NAV (end of the day pricing) and don’t trade like stocks
ETFs – Funds that track an index (group of stocks) that trades like stocks
Hedge Funds – Super risky non-transparent funds (You don’t know what they will do with your money). Use caution.
Disclaimer: Definitions and opinions are my solely my own. Any information posted through this website are soley my opinion and are not on behalf of any brokerage/advisory firm. Always use caution before investing.
My experience with the stock market
I worked at a world-renown brokerage/advisory firm for 10 months in an advisory training program (and will probably return at some point). I obtained my broker’s license (with the help of an amazing tutor named Rob Lear) and learned the basics of investing. One of the biggest lessons I learned is that you can read a ton of research reports, follow trends and companies but when it comes to investing – it’s always about taking an educated guess.
I personally am a fan of Fundamental Analysis – where you look at the company overall from a business perspective. Others use Technical Analysis, a tactic where you look at trading patterns. Because of my experience with couponing, understanding companies, sale cycles etc – I feel I have a pretty good view of the retail/consumer sector.
My goal is to continue my career path in the Financial realm so I can teach everyone not just how the market works but to also understand why investing is important. I also need to point out that investing isn’t just for the wealthy. It’s a growth opportunity for many and it’s also kind of fun and exciting. (At least for me, it is.) : )
I hope that one day (G-d willing – soon) when I become a Financial Advisor, (pretty much only 1 test away), that you’ll allow me to personally help you, your family and friends with your investment needs.
Why Invest?
Most people’s first thought it Retirement. It’s true. Investing helps grow the money you put aside for retirement. Investing doesn’t have to be for retirement though, it can be for any type of savings. Aside from growing the money that has been sitting in your bank account, you can save for college, weddings and get this, you can even save for Jewish Day School! (That one stuns people!).
The biggest reason why people say you should invest is to “Hedge Against Inflation” which is a fancy way of saying, the prices of items and expenses keep going up and sometimes your income doesn’t go up at the same rate.
I personally think couponing is the best hedge against inflation, but clearly, I’m biased. : )
