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What to know about the stock market (2007)

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Re: What to know about the stock market (2007)

#81

Post by yen223 »

fergie wrote: post #57
sdevonoes wrote: post #11

Am I the only one in HN who is not into the stock market? I live in Western Europe and I would say 75% of my acquaintances don't do stock market. People I have known in the past (old people) didn't do stock market either. They all seem to have lived a normal life (decent jobs, decent house, decent family). Nothing extravagant but they got enough money to be "happy" in life.

Whether or not you care about the stock market is basically a question of whether you run a functioning business or not. If you run a function business then you are have cash sitting on accounts. Even for a fairly modest business, a reasonable operating cushion dictates that you always have 6-7 figure cash reserve. Ideally you want this money to be sitting somewhere where it generates good returns, yet can be accesse…

If you're running a functioning business why wouldn't you plough the money back into the business?

Re: What to know about the stock market (2007)

#83

Post by GlennS »

sdevonoes wrote: post #11

Am I the only one in HN who is not into the stock market? I live in Western Europe and I would say 75% of my acquaintances don't do stock market. People I have known in the past (old people) didn't do stock market either. They all seem to have lived a normal life (decent jobs, decent house, decent family). Nothing extravagant but they got enough money to be "happy" in life.

I think traditionally most people in most countries ignored the stock market and consider it boring to talk about.

Maybe less so in the USA? Not sure.

But a lot of computer folks have spare money at the moment, and in that situation you have a few options: consume more, keep it in a savings account, or invest. And some significant proportion choose invest.

Keep it in a savings account is a common option, but quite a bad idea.

Probably the majority of people who invest do so in property, considering it safer than stocks (which I disagree with, although there are other reasons to like property).

This may be changing a bit in recent years, because access is easier now. In Sydney I see adverts for stock brokers at the bus station.

Seems like some gamblers have switched to the stock market to get their fix too.

Re: What to know about the stock market (2007)

#84

Post by sokoloff »

yen223 wrote: post #81
fergie wrote: post #57

Earlier quoted context omitted.

Whether or not you care about the stock market is basically a question of whether you run a functioning business or not. If you run a function business then you are have cash sitting on accounts. Even for a fairly modest business, a reasonable operating cushion dictates that you always have 6-7 figure cash reserve. Ideally you want this money to be sitting somewhere where it generates good returns, yet can be accesse…

If you're running a functioning business why wouldn't you plough the money back into the business?

Eggs and baskets. If I owned a company that provided for my current income, I would not want to place myself in a position where the faltering of that business killed both my current income and my retirement at the same time.

By all means plow a lot of it back into the business, but there’s good reason to pull some out over time as well.

Re: What to know about the stock market (2007)

#85

Post by cehrlich »

This is a great article that explains markets (not just the stock market really) in an easy to understand way.

The one thing I believe people should know about the stock market is: There are people with more capital, time, and knowledge than you who will consistently beat you. Picking individual investments is mostly a sucker's game.

Buying tech stocks and/or crypto in the last couple of years has been a consistent exception to this, but I worry that many of the people who made good money from those investments will now believe that they have some superior understanding that lets them consistently beat the market. But sooner or later they will find themselves in a similar situation as those who thought investing in Japanese Tech companies was a surefire way to beat the market 20-25 years ago.

So my advice to anyone who already got rich from their investments in the last couple of years: Congratulations! Now take that money, invest it in the most boring thing possible, and enjoy life.

To everyone who is trying to get rich quick now: Do your thing I guess, but be aware that you're gambling.

Re: What to know about the stock market (2007)

#86

Post by iso1631 »

hericium wrote: post #5
Synaesthesia wrote: post #2

You should probably get to know some critical aspects of markets too, this article just praises them. That is pretty much the norm, but I think it's a valuable educational endeavour to look at critiques of markets.

Fully agree, especially during current instability. I think that everyone got used to constant "it's about to crash" news but the volatility and uncertainty are visible in recent months. I don't remember when inflation numbers releases were that impactful. The good coming out of this is the visibility of how strongly dependant cryptocoins are.

The "Stock Market" is down since July, it might not have crashed but it's not going up

Ukraine kicking off is not going to help in a sane world, but it's not a sane world so I half expect all time highs while Odessa burns

Re: What to know about the stock market (2007)

#87

Post by habosa »

sdevonoes wrote: post #11

Am I the only one in HN who is not into the stock market? I live in Western Europe and I would say 75% of my acquaintances don't do stock market. People I have known in the past (old people) didn't do stock market either. They all seem to have lived a normal life (decent jobs, decent house, decent family). Nothing extravagant but they got enough money to be "happy" in life.

In the US if you have a retirement savings account (which is very advantageous to have) it’s likely to be a 401k or IRA which you have to manage yourself. So having some basic understanding of the stock market is essential to your financial future.

Re: What to know about the stock market (2007)

#88

Post by sokoloff »

pasabagi wrote: post #74
pjc50 wrote: post #39

Earlier quoted context omitted.

Retail _traders_ tend to lose money, retail _investors_ who buy and hold tend to do OK in the long run. > investment is tied into a basic necessity, like a house ? What does this refer to?

I mean the rights of tenants are such that if you want to live in decent conditions / a stable domicile, you have to buy a house, thus becoming a property investor.

I think the act of buying a house to live in should be considered more an act of consumption than of investment.

It’s not 100% consumption, but it’s almost surely we’ll over 50% consumption and yet people get confused by the fact that a slice of it is forced savings and a sliver of it is an investment and they focus on these latter two more than is appropriate and in so doing are prone to less rational decisions than if they thought of it as mostly consumption IMO.

Re: What to know about the stock market (2007)

#89

Post by gumby »

yen223 wrote: post #81
fergie wrote: post #57

Earlier quoted context omitted.

Whether or not you care about the stock market is basically a question of whether you run a functioning business or not. If you run a function business then you are have cash sitting on accounts. Even for a fairly modest business, a reasonable operating cushion dictates that you always have 6-7 figure cash reserve. Ideally you want this money to be sitting somewhere where it generates good returns, yet can be accesse…

If you're running a functioning business why wouldn't you plough the money back into the business?

Hedge your risk. Investors get diversity (portfolio) spacially: they get a piece of lots of businesses. Entrepreneurs diversify temporally: they can reasonably only put their time into one thing at a time, and only a few over a lifetime.

So if your business is doing well you can avoid putting all your eggs in one basket by investing some cash personally outside the business. And the easiest way is to jus put it into an index fund and then concentrate on your business.

Re: What to know about the stock market (2007)

#90

Post by habosa »

mypastself wrote: post #82

Can anyone recommend a quality book with similar content? Mind you, not about investing strategies, but just basic facts about financial markets (including stocks and bonds). I’m fine with textbooks, provided they’re relatively easy reads, and under 500 pages.

Despite being a “comic book” this is a pretty great choice: https://economixcomix.com/
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