Some Insight To Understanding The Stock Market
Many people that have trouble understanding the stock market. They think that just because they were able to make money in their first trade or two, that they now know what they’re doing. Most likely you will get lucky from time to time, but you can’t continue to trade like that. Trading in the stock market is not for the faint of heart, it is not like taking a trip to Las Vegas and letting it ride on 32 black (I don’t know if it’s black or red, but you get the idea).
What I’m trying to say is that you need to educate yourself in the stock market as well as each individual stock that you’re going to invest in before you put your money to work. When someone refers to the stock market they refer to all the different markets that are out there. The big three that they talk about is the DOW, NASDAQ and the S&P 500. there is also the NYSE (New York Stock Exchange), NYMEX (New York Mercantile Exchange) and the CME (Chicago Mercantile Exchange).
Depending on what type of stock you want to invest in you need to know the sectors, Financial, technology, Biotech, Retail, Agricultural, Energy and there are more that I won’t even get into talking about in this post. The point is that there are quite a few things that you need to learn because if you don’t, your luck will only take you so far before you start to lose it all.
Just because you like Google and you use it all the time while on the internet doesn’t mean you know what is going to happen to the stock itself. In 2008 the analyst were say that Google would go to $1000 per share in no time. They said that when the stock was climbing over $700 a share, but six months later it’s was trading at $400 a share. The company is still a great and growing company, but if you listen to the “experts” and bought 100 shares, you would be out $30,000. The stock he company was effected by the overall condition of the markets as well as people who made a killing in the stock, decided to sell, causing the price to come off it’s rally.
Another part to understanding the stock market is that there are Treasury bonds, aka T-bills. it’s a piece of paper telling you that you are going to receive a fixed sum of US dollars at some designated point in the future.
They’re held for a set amount of time before you get the full advantage of the interest that was offered to you when the bond was purchased.
ETF’s and Mutual Funds are (for lack of a better word) stocks of a index of stocks in one sector. You can purchase these types of investments without having to pick one particular stock, instead you can be invested in an index of agricultural stocks or even the financial sector. The choice is yours to decide.
Tags: agricultural energy, chicago mercantile exchange, financial technology, nasdaq, new york mercantile exchange, new york stock exchange, nyse, Understanding The Stock Market