It is hard to believe we are in the final quarter of 2012 and I have been working with investors for a quarter of a century. What shocked me the most is I stumbled across people who truly do not understand what the stock market is about or the basics of investing. These are not twenty- or thirty-year-olds, but those in their forties and up. They are people of intelligence, working, and many owning their own companies. But they simply do not understand the functioning of the stock market.
It was while I was attending different functions that I meet dozens of people who had not invested. When they discovered what I do I watched their expressions change from a relaxed, smiling face to one reflecting concern or even fear. When I asked if I had offended them, the general response was “No, I just don’t understand the markets.” I would ask if they had an unpleasant experience and the response was “Not really, they just do not make sense and no one explains them in a way I can understand.”
One evening I was reflecting on these conversations and decided that given an opportunity I would attempt to give a basic explanation of investing. The next time I was at a function and a similar response came up, I stated that I would like to attempt to explain the basics of the stock market.
To my surprise I was asked if others could join in.
My explanation went as follows:
The stock market is an exchange. You go there because you want to exchange your money for a small ownership of a company. There are those who believe that a company’s stock is poised to go higher while another believes its stock will go lower. The more buyers, the stock will go up … or if there are more sellers, the stock goes down. The decisions are based on a belief in the company’s ability to produce profits from its product or service. Those who sell are of the mindset that the companies profits will not rise.
Another way to think of it is like dating. Typically, two people meet and have an initial connection and decide to go out. If they find they have a lot in common they continue to see each other. However, they may decide they have little in common and move on. But if they discover they have a lot in common, they will continue to date and keep learning about each other. This is similar to a stock. If you like the stock, you will continue to stay in the company and buy more; but if changes occur which are unsettling to you, your decision may be to break off the relationship and sell.
The process of investing is not hard. It is the commitment behind your choice which must be considered. It takes time for a company to grow and offer you the benefits which you are looking for. I have and continue to recommend you to turn off the investment channels and discover what your stocks are doing. One of the definitions of invest means to use, give, or devote for a purpose. When investing you want to devote time as well as patience for the company to prove their product or service.
Most people, even those who have not invested in the markets, are familiar with the name of Warren Buffett. You will discover that his wealth was created over years not days, weeks, or months. He invested in companies which he believed offered great potential.
The markets were created to give people the opportunity to create prosperity. One key to your success is keeping your emotions out of your decision-making process.
Let’s have a conversation
Let’s get together, face to face. I will help you experience — and understand — how your money will grow in the world of long-term investments. Let me show you how much fun it can be! Call me, Vicki L Wille, today at 702-878-9562.
Or click the button below and…