Entering the world of investing can seem like a daunting endeavor. With so many different stocks, bonds, ETFs, and mutual funds to choose from, how can one ever figure out where to start? For new investors, I believe the answer to this question is large, proven companies that pay dividends.
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The Importance Of Rationality
“Economics,” as I was told early in my undergraduate career, “is really just common sense, codified.” This seems true enough. Economics is fundamentally concerned with scarcity and opportunity costs—the intuitively obvious, yet often overlooked ideas that that there is no such thing as a free lunch, and that if you spend your money on one thing, you can’t spend it on something else. It gives us the tools to understand and measure these concepts in the world around us.
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Make The Right Bets
As I reflect on my three years of investment experience, I realize that I've done many things correctly. However, I also understand I've made my share of mistakes. I'm not at all upset with the errors of my past, as they've provided me invaluable insight into how the game is played, and are part of the learning curve associated with the stock market. Although I encourage people to push their limits when learning a new activity, investing is different.
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Stock Talk
If you’ve been following the market lately, there is no doubt that you have encountered the term “earnings season.” In this article I will explain what earnings season is, as well as dissect the important terms that accompany this time of year. Additionally, I will examine how analysts and investors react to financial information released during this period, and the way in which stock prices are influenced by these data.
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Beating The Odds
In my previous article, Getting Back To Basics, I explained why long-term investing is a viable strategy for new investors and provided numerous examples of basic investment fundamentals. This week, I aim to build upon those fundamentals by introducing two more investment concepts, diversification and index investing, while also describing how exchange traded funds (ETFs) help investors mitigate risk.
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The Rotting Apple
What I am about to write will be wildly unpopular amongst Apple’s cult following, but remains relevant nonetheless. It will be controversial and, to some fan boys, unbearable. However, this is the opinion of an investor, not a consumer (although I do own two MacBooks, five iPods, two Apple TVs, two iPads, and an iPhone). Knowing this, please keep in mind that if I were to hypothetically favor a company, my bias would be in favor of Apple (AAPL).
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Getting Back To Basics
Last Friday concluded one of the worst weeks for the stock market in recent memory. The Nasdaq took the largest hit, losing 3.1% for the week (its biggest single week loss since 2001). The S&P 500 finished down 2.6%, while the Dow Jones Industrial Average slumped 2.3%. Inspired by this sharp turn in the market, panicked investors went on a selling spree, specifically towards the end of the week.
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