It’s common for college students to have a fuzzy understanding of the way in which stocks are traded, but it is important that the current generation of college students better educate themselves on the basics of the stock market.
Many college students tend to know that the stock market is a central part of the economic system, and acknowledge that it is important to understand, but haven’t taken the time to really learn about how it works.
To fully understand the importance of the stock market, one first needs to understand what it does. In the most basic sense, the stock market, which is made up of many different exchanges including the New York Stock Exchange and NASDAQ, gives companies capital from investors purchasing a piece of the company or what the market calls stock.
By owning a piece of the company, that investor is now a shareholder and has the potential to make money off of the stock as the company’s value increases. Richard Fisher, a financial advisor with D.A. Davidson & Co., understands the importance of knowing fundamentals of the stock market.
“People should have a knowledge of mutual funds, and a basic knowledge of stocks,” Fisher said.
However, where can one find this information, and how can one go about gaining knowledge about the stock market? Fisher recommends reading through websites such as Yahoo finance, Investor’s Business Daily, Wall Street Journal, Forbes Magazine.
One thing he highlighted was Yahoo Finance, a website that allows anyone to thoroughly research and gather information about the market and the backgrounds of companies and their stocks.
With the Internet giving us so much easily accessible information, students have no excuses when it comes to not being educated about the stock market.
“It used to be that you had to go to the library and look at the financial statements that were released a quarter before by the company, 20 years ago you had to do that, now it’s at your fingertips in Yahoo finance,” Fisher said.
While the information is readily available, the stock market and its inner workings can be intimidating. If you are looking to learn the basics of the market, but you like your information short and sweet, check out TradeHero Academy, on YouTube.
This video series offers a starting point for anyone to learn basic terminology, how to know the difference between stocks and bonds and even how to look at the cycle of the market.
Not only is it important to understand the basic principles of the stock market because it is one of the most crucial parts of our economy, one should also realize that you can invest in just about anything you can think of. Supporting and investing in certain companies can directly affect your future.
Fisher pointed out some companies that are doing big things and specifically discussed biotechnology companies claiming that they “are extending our lifespans.”
Now while that is a big statement, he has a point. If no one chooses to invest in companies and give them capital, much of the technological developments that have been made would never have happened. Without resources, a company is nothing more than a name.
The stock market is an important piece of the international economy, but it’s also so much more than that. It is an entity used to support innovation.
Without the knowledge, the innovation isn’t possible. College students need to give themselves the building blocks to understanding the stock market and how the financial system works.