Let’s talk about Stocks baby,
Let’s talk about you and me,
Let’s talk about all the good things,
All the bad things, that may be…
Let’s talk about Stocks!
Salt-n-Pepa, eat your heart out!
Today we’re gonna talk about what it truly means to invest in the stock market. Here’s how it typically plays out. Take Bob: You see, Bob is a regular guy. One day he heard a hot stock tip while shootin’ the sh*t around a water cooler in the break room. He then quickly goes on his smartphone, selects that hot tip stock ticker, clicks the BUY button, empowered with the belief that he can very soon serve a ‘cya later’, no 2 weeks, burn all the bridges email notice to his boss. Bob looks at his smartphone trading app every 15 minutes hoping to see those triple digit returns on his newly purchased stock. Instead, as the minutes turn into hours, and hours turn into days, he witnesses his stock app reads ‘-5%’ since his purchase. Sensing a bit of panic that his hot tip stock could tank further, Bob hits the SELL button on his trading app and presto, his stock is sold. He’s 5% poorer and has to dig through his drafts folder to delete that email notice he was so eager to send.
Don’t be like Bob. Buying and selling on tips, reacting with emotion, Bobs lose a lot of money on trading this way.
The true meaning of stock ownership is when you buy shares of a company, you’re actually buying a piece of its business.
This entitles you to have a say and a share of all the future profits of that company. And that goes for every share you buy on any stock you buy.*
Unlike Bob, a savvy investor looks for QUALITY in a company before any purchasing is done.
When you buy a share of say, Coca-Cola Company, you’re an owner of Coca-Cola. The more shares of it you buy, the more ownership of that company you have. And that’s legit. Now let me ask you: If you own Coca-Cola Company and its making money for you every day, would you sell if you see the price drop 5% on your trading app? Hell no! You’d buy more! In fact, I’d secretly wish the price will go down even more so that I can scoop up more of it at an even lower price!
Which leads me to think the term stock market is very misleading. Instead, it should really be called the:
Companies Market – because the stock market is really a place to buy and sell shares of COMPANIES.
So please, stop behaving like Bob the trader and start thinking like Bob the business owner. When you start to think in this mindset, you’ll start behaving like a true investor and the money will follow, I promise.
Oh and last thing: don’t listen to hot stock tips, especially near a water cooler at work.
No offence to anyone named Bob out there, it is merely a name in which I randomly selected to illustrate a point.
*unless otherwise specified since some stocks do not have voting rights