Stocks 101

I've been actively watching the stock market for about a year and a half now. I like this phrase, actively watching. It means I pay close attention, but I'm not out there trading. The money that I have in the stock market is in my retirement account, and it's currently in index funds.

My realization that I was going to be throwing a significant portion of each pay check into this "retirement account" thing was what spawned my interest to know exactly what was happening with that money. It's been an eye-opening experience to say the least. The stock market is a lesson in humanity in it's most primal state. Profit, loss, fear, greed, elation, disappointment, power. Just a few things you can readily identify when looking at a basic stock chart.

With all of my reading, I've come across a few initial take home points to share. First, most of the money being made in the stock market is not being made by people actively trading stocks. Most of the money being made is going to people that have actually built these companies. If you want to hit it big on Wall Street, then build a Fortune 500 company. Surefire way to make millions. Go...

Second, online stock trading seems to be a lesson in how technology has made things easier but not necessarily better. Buying shares in companies used to be a deliberate, thoughtful act that required much thought and effort to even get your order to the trading floor. Now, you can spend millions buying stocks in seconds. Is this really better? Has using technology to chase quick profits really been a good addition to our culture? I think not.

Even more ironic is how the appeal of online stock trading has stacked the deck even further against the individual, if you fall into the trap. Ever tried to day trade against a multi-billion dollar corporation with supercomputers and countless Ivy League trained mathematicians and businessmen? Swing for the fences Average Joe. Just make sure you don't get that uniform dirty because you are going to be out of the game quick.

I'm going to be writing more about stocks in the future. It's a subject that I really enjoy. Though it may sound like I dislike the entire system, I actually support the idea of buying and selling ownership in a company. Only in America can you find a company you like and hitch your financial wagon to them. You also might be able to buy a naked put option and lose your shirt when the stock crashes, but you never get the good without the bad. Welcome to life.