Updated: Jan 13
It is time to no longer be afraid of conversations about the stock market.
Honestly, it is really not all that complicated. What most people do is string together a bunch of offset words to explain one of two things; why the stock is going up or why the stock is going down.
Investing means that you own businesses. Stock for a company is a piece of ownership meaning that you have a RIGHT to whatever money the company makes if even that is just a smidgen of a percentage, it is ownership. You should want to know about the company you are becoming partial owner of. The sense of ownership adds more incentive to RESEARCH the company that you are giving your hard earned money.
IT IS OK IF YOU DO NOT READ EVERY PIECE OF INFORMATION.
But please begin to poke around through the sites listed above, even if you just browse the home pages for 5 minutes. 5 minutes is all I am asking for.
The key is to gather as much as it takes for you to make a sound financial decision. That concept applies to just about anything finance.
But it is important to ask and answer these four questions (which I found through my investment account with Merrill Lynch) when hearing, speaking, eavesdropping, or thinking about a company...
1. What is the goal of the business?
2. How does the business make money?
3. How well is the business actually doing?
4. How well is the business positioned relative to its competitors?
All of these questions have simple answers. The more difficult one makes the answer, the more clouded your judgement becomes.
Like I said last week, never PLAY yourself and never LIE to yourself, it is the easiest way to lose money.
So now that we know what needs answering let’s dive into deciphering market talk, for which you only need to remember two things…
First, you must understand the difference between NOISE and NEWS. Noise is usually titled something like “Break Out the Pompoms Because This Asset is Leaving Stocks in its Dust,” or “Stocks and Bonds Tell Investors Two Different Stories.” Those are real headlines, I promise.
But as you can see neither of these headlines point to a specific overall objective, they are more like filler articles between the cover story in a magazine. Opinions are fine to digest when the appropriate weight is placed on its validity but this is a perfect segway into our next point.
DO NOT listen to anything someone says if they begin their statement with “I think (blah blah blah)” 9 times out of 10 they have no idea what they are talking about. We call this speculation or gossip.
Now, NEWS can hold important messages that can sway the market up or down and also affect stocks over the short and long term. They offer reminders for important upcoming economic events, analyst upgrades or downgrades (pretty much grades for stocks), the release of any recent reports (such as the Baker-Hughes rig count, jobless claims report, or the Federal Open Market Committee meeting minutes), and most importantly, particularly during a presidential transition period, what government officials are proposing to be future policy.
Most times you can tell the main idea from the headline, for example, “Yellen Will be Last Fed Official to Speak Before Central Bank Makes Rate Decision.” Within this headline, the Federal Reserve chairwoman is listed, Janet Yellen, a major economic event is announced, “Central Bank Makes Rate Decision” and in the middle reads, "Last Fed Official to Speak," meaning that the last piece of information for active participants in the market will hear before a large economic event will be the leading authority on the current economic status of the country....that is REAL NEWS!!!! CLICK BAIT CLICK BAIT!!
These are the stories you should click on to learn more because they can have valuable knowledge that can effect both your short and long term investment plans.
Know that we know the game, it is time to know the players!
Come back next week for some more golden nuggets!
Share what you learn with friends, family, and a stranger!
Another payday, another blessings. Feast and give thanks!
- Jauqius Frazier Buckman