Part 4: Investing in Individual Stocks Many beginner investors eventually face an important question: should they invest directly in individual stocks, or simply buy into an investment fund? The goal of investing in common stocks (or any other asset) is to earn the greatest return for the least amount of risk. But whether an investor […]
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This post is Part 3 of a Beginner’s Guide to Stock Investing series. Part 3: How to Buy and Sell Stocks How do investors actually buy and sell stocks? The answer depends on the market in which the stock is sold. In Part Two of this guide, we learned how the stock market consists broadly
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This post is Part 2 of a Beginner’s Guide to Stock Investing series. Part Two: What Is the Stock Market? In December of 1980, a computer company founded out of a garage in Los Angeles, California, began trading on a stock exchange known as the National Association of Securities Dealers Automated Quotations (NASDAQ). At the
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This post is Part One of a Beginner’s Guide to Stock Investing series. Part 1: What is a Stock? Most people have some familiarity with the stock market. But what is exactly is a stock? Why do people buy stocks? There are plenty of people who trade stocks. That is, they attempt to forecast the
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The last index that we will look at in this series is the Russell 2000. The Russell 2000 is an index managed by FTSE Russell, which consists of companies with smaller market capitalization and is thus considered a “small cap” index. The term “small cap” is somewhat of a misnomer. Although there is no official
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The third index that we will look at is the NASDAQ Composite Index. Unlike the other indices that we have reviewed (S&P 500 and Dow Jones Industrial Average), the NASDAQ Composite consists only of stocks that trade on the NASDAQ. A brief review of the NASDAQ exchange is thus a good place to start. Brief
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The Dow Jones Industrial Average (DJIA) This post is the second part in a series covering the four major stock indices. What Is the Dow Jones Industrial Average? In the last post, I discussed the most referenced stock index – the Standard and Poor’s (S&P) 500. Another widely reported, and far older, index is the
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This blog post is the first in a four-part series. It explores the four major stock indices, which are the benchmarks that shape how we talk about “the market.” Before diving into the S&P 500 specifically, it’s worth taking a step back to understand what a stock index really is and why it matters. From
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In a previous post, I discussed how individual investors have a significant advantage over professional money managers: they don’t face the pressure of outside capital being redeemed. This allows them to adopt a long-term investment strategy, regardless of short-term market fluctuations. In contrast, professional fund managers must consider short-term performance to retain investors and assets
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In a recent article in The Wall Street Journal titled You’re More Like Warren Buffett Than You Think, financial journalist Spencer Jakab highlighted what I believe to be one of Warren Buffett’s most important, and certainly most overlooked, competitive advantages: Buffett has permanent capital with which to invest. This is not the case for managers
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