You're driving to work in the morning with the radio on and hear the following. "Bears took control yesterday and e - mailed the Stock Market down 180 points on fears the today's Fed decision. Some analysts feel Stocks the over-bought and due for a correction. " You roll your eyes and look for some music. What language could they be speaking?
Here's a real straightforward investor guide that translates the above in very basic terminology. Wall Street has its language. If you want to learn to invest, it's good to start learning some of the text. Keep your perspective. This investor guide is named a written for the clueless who want to learn to invest.
The Bears are a football team in Seminole florida. Wall Street also goes through bears. These bears are negative around the future direction of Stock the pricetag, and they bet that Stocks decline. This they do through selling their Stocks, or they sell short. When you sell short you bet that a Stock, or Stocks in general, will go down your own body value. This is law, and has been going on for many years. When investors on balance are placing sell orders or orders for sale short vs. buy commands, the Stock Market goes finish off.
"The Stock Market was down 200 points" means that the Dow Jones Industrial Average (DJIA or simply DOW) fell 200 leads to. The DOW is preferred of the market tells or indexes. Basically, it tells investors how Stocks in general performed. If the Dow fell from 10, 000 in addition to 9800, for example, it was down 200 points, for a loss of 2%. In other words, if you owned Stocks last night, you probably just lost about 2% inside your investment.
The "Fed" refers to the Federal Reserve, which oversees our financial system and sets policy on interest rates. In this case retired persons were, on balance, afraid that the Fed wouldn't move to lower interest rates in the economy. Stock investors try to anticipate the future, and generally favor lower curiosity. They don't like fear and uncertainty, and solution by selling Stocks, associated with sends the Stock Market finish off.
Analysts are experts individuals who express their opinions. They refer to Stocks as "over-bought" if they feel that the Stock Market exceeds it should be. This implies that if you are a smart investor that you want to sell before everyone other than you does, in their moderate opinion.
"Due for a correction" implies Stocks go up and Stocks fall, and sometimes they go too far in one direction. In this case some analysts feel how the market has been throughout the day roll too long, and sooner or later Stock prices will fall months, since Stock prices usually fluctuate.
Investor guide hint #1: If you want to learn to invest in perhaps the Stock Market, start by understanding the language. Then you can interpret the financial information, and anticipate how other investors will react to it.
Investor guide hint #2: Realize that other investors will react to the news if they feel it happens to the Stock Market. In this situation they sold Stocks as well as sent Stock prices width wise.
Investor guide tip #3: As you learn to invest and play the Stock Market Game, try to detached what's truly important just by hype. Some news has long-term effect on Stock prices. Hype is a temporary distraction of little everlasting significance.
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