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Check out these useful tips about Stock Market trading that you need to know! From Bulls and Bears, to the different types of investments, this is a great video about the intricacies of the stock exchange, no matter what you level of investment currently is!
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Transcript Provided by YouTube:
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bears, bulls, and a lot of potential room to supplement your income. The stock
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market can either be a blessing or a curse on your bank account. Following the
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tip in number one could make you a millionaire. Here are seven things you
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need to know about the stock market.
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Number seven
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Know all of your options.
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A lotof people get into the stock market
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looking to increase the worth of their savings, and this makes a lot of sense.
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With the current interest rates on most savings accounts, and when factoring in
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steady inflation of modern currency, there’s a good chance that leaving your
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earnings in a bank for ten or more years may actually cause you to lose money.
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That said, while you can certainly make a lot of money in stock, you should know
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that there are a lot of other options, too. Real Estate investing might be
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easier than you think. Gold is almost always increasing in
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price…if you hold on to a long enough. And angel sites on the Internet, through the act
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of loaning money to other people, can also be a great investment. That is
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called peer-to-peer lending and there are actually a good number of websites that
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deal with it that you can check out. Stocks are great for some people, and not
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so good for others. But no matter what you choose to invest in, the reality is
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you should do as much research as you can.
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Who knows with enough study you might even be the first millionaire in your neighborhood!
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Number six: Risk vs. Reward
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The two most important principles when
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investing in stock that you really need to get familiar with is risk and reward.
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Generally the higher the risk and investment, the higher the potential
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reward that’s also available. A good example of high risk and high reward is
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the companies that are either on the decline or they’re in the startup
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business. Depending on what’s going on within these types of companies you may
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be able to find their stock for relatively cheap
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however in either of those situations you’d stand to lose a lot of capital if
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you’re wrong about their potential to either succeed or come back from
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disaster. Even with the risk though there are certain types of investors that are
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known for taking these exact calculated risks. It’s not uncommon for even your
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average, but still somewhat experienced investor, to buy if the stock of a
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company that looks like it’s going to make a rebound. Angel investors and
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venture capitalists make a living by investing in start-up companies. That
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said these two types of investors often have a sizeable fortune to fall back on
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and can afford to take a few risks in their stock picks. Not to say that venture
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capitalists don’t have a lot to gain if their smart about their investments
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Jim Breyer made a lot of money investing in a young Facebook and Peter
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Fenton did the same with startup Twitter. Before buying a stock you should always
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weigh the risks versus the reward that’s associated with it remember that and you
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should be golden.
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Number 5: The state of the market
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Bull markets. Bear markets.
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what does it all mean? Well don’t worry you’re not going to see
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a grizzly or a bull driving away or goring investors – or their money – on Wall
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Street. A bull market is just a term that’s used to describe a stock or
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industry…maybe even an entire economy that’s rising in price and earning
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potential. A bear market, on the other hand, just means that a few stocks or the
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market as a whole is stagnant or losing in value. Where did these names come from, though?
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They do seem a bit random and off-the-wall, don’t they? Well, a long time
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ago bear and bull fighting was actually
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pretty popular so the two animals were seen as opposites by society at large.
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This of course was before all of the animal cruelty laws of today. Bears were
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known for attacking their prey by swiping their claws down, and bulls were
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known for thrusting their horns up into the air when attempting to gouge
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something. Thus a market that’s going straight into the dirt is known as a
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bear market and one that’s being tossed right up into the air is known as a bull
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market. There are lots of opportunities in both good and bad markets if one
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knows where to look. Warren Buffett John Paulson and Jamie
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Dimon all made a pretty penny during the economic recession of 2008. Many an
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investor will advise you to “buy when there’s blood on the streets.”
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Ouch! That’s merciless investing for you!
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Number 4: Vultures, too?
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The stock market is
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more than a place where you can invest money in a company to make money. The
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overall stock market is the heartbeat of the economy and individual stocks are
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the pulse of the companies. Many people think that only a company with a strong
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pulse is worth looking at, but this isn’t always true. There are even some
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investors who don’t look for companies that are succeeding at all but, in fact,
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Those that are actually in debt. Investors that actively look for
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sick and dying companies are often referred to as vulture investors. They
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look for stocks that are selling for under fair value, and then these
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opportunists buy the debt of the failing companies. Sometimes vulture
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investors are actually banking on a company being saved at the last minute
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by a merger or restructuring, but they’re also known for scooping up the land
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equipment and other assets of crashing businesses. Now you know why they’re
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called vultures. Picking away at the pieces of a company can give you a
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ruthless reputation but these types of investors can also align pockets. Of
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course, vulture investing is, by nature, risky…but it’s also free of many of the
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other risks of normal investing, as well. It’s also a perfect example that you can
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make money by not doing what everyone else in the market is doing. In this case,
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by not buying stocks, but by preying on them instead.
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Vulture investors invest in debt and pluck away assets but you can also
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invest in a lot of other things that aren’t stocks – like bonds for example.
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Being smart and thinking outside the box may very well be the way that you
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become a very rich person. Remember, ingenuity is often rewarded by
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the world when it is mixed with purposeful patience and tempered by
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measured intelligence.
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Number three: Don’t just invest in one company.
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Have you ever
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heard the expression don’t put all of your eggs in one basket? Well, sometimes
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that saying is true and sometimes it’s not. In the case of stocks though, it
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usually is true. Having a diversified stock portfolio means investing in a
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large number of stocks, but not investing too much money in a single one. A good
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rule is to not invest a high percentage of your money in any one stock or…any
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one TYPE of stock. You should also avoid just dumping all of your money in one
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sector or industry, such as all “tech” or all “utilities” – at least in the beginning of
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your investing journey. It is, however, a good idea to have your money stored away
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in stocks and assets that all do differently in different markets. A smart
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investor will likely have assets that thrive well in a bull,
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a bear, and even a sideways market. A diversified portfolio will be your base
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for your investments. It’s generally best for you to invest in a low-risk and slow
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return stock and asset at first, unless you’re willing to really manage your
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money and assets actively. if you’re smart, and invest a good amount of money
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in a safe and well put together portfolio ,you might be able to live off
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the money that you make…or you can invest your profits from your stock
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earnings into higher risk assets and roll the dice. Hopefully, though, you weigh
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the dice in your favor by following all of the tips!
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Number two: Have a plan for balancing your portfolio.
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If you took our advice and invested in a diversified
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portfolio, then great! You’re well on your way to success if you keep your head and
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your wits about you. Just remember every once in a while certain stocks may start
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weighing your investments down. It’s never a good idea to panic and sell your
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stocks for less than you paid for them, but, if a certain company or industry is
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consistently underperforming then there may be times when you need to evaluate
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a portion of your investments in those stocks. We warned against making
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spur-of-the-moment decisions in investing, so to avoid that, it’s great to
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have a plan in place for exactly how you’re going to go about making critical
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decisions before you make them. Just remember to make these plans when the
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market is doing well and not to wait until it’s starting to take a dive.
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He who prepares is often he who succeeds, after all.
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Number one: Understand what the stock market really is.
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Perhaps the simplest and most basic tip, this is also
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probably one of the most important that you can follow. The reason that it’s so
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hard to predict the movements of the market is simple…people’s emotions can
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affect the stock market pretty drastically. We’ve all heard about the
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Great Depression where scared stock investors blew the economy to high
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heaven for years. What actually caused the crash of 1929 was the fact that Wall
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Street had been over valuing stock for a long time before that everyone had just
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gotten swept away by their emotions and optimism. But the second they started to
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realize that half glassful attitudes had overinflated the market, well then
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all hell broke loose and everyone started to panic. Millions of dollars
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were traded on black Tuesday by worried investors. That’s the day
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that would cause the market crash, ushering in the depression. At the end of
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the day, stocks aren’t all mathematics, numbers, and complicated formulas.
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Although it’s true that these things can help to predict the ups and downs of the
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market…in reality, when you buy a stock, you’re investing in a company that’s run
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by people. People who are relying on you and other investors to give them the
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money they need to run their company. Really, people are the stock market. Even
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though it’s easy to forget that with all the numbers and graphs floating around,
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just remember to think with your head and to understand the people in the
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market with your heart. And as Warren Buffet once said,
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“be fearful when others are greedy, and be greedy when others are fearful.”
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Don’t forget to subscribe below.
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Thanks for watching and we’ll see you next time!
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This post was previously published on YouTube.
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Photo credit: Screenshot from video