Stepping into the stock market helped me understand the economy 10x faster than college
As an accounting student, I didn’t enjoy learning economics; however, situations forced me to become an accountant, and I’m still trying to change my career path as soon as possible. Learning something you dislike is a waste of time; it will only increase your stress level. Thank goodness I graduated on time. But do I fully understand what I’ve learned? Mostly no, at least not until I have enough money to invest in the stock market. It was around Q3 of 2021, yes, I’m a newbie, and this is what I’ve been learning so far:
1. Screening a Valuable Company
GICS classified eleven stock market sectors, varying from finance, technology, real estate, energy, etc. I did not analyze all of them; in fact, I am only interested in the technology and energy industries, but feel free to learn about other industries. Finding out how a company operates was fun and interesting for me.
2. Annual Report for the Rescue
Don’t buy anything that you don’t understand. I’m a long-term investor, so instead of analyzing the chart and candlesticks, I read the annual report in depth. I used to hate reading the annual report, but I can’t buy stocks from a company unless I know their financial situation. Reading a lot of annual reports made me more familiar with them, which helped me understand the financial report. It’s hard to believe I spent 3.5 years in college and didn’t understand half of it.
3. More details on the macroeconomic effect
Macroeconomics is a branch of economics that studies how an overall economy — the markets, businesses, consumers, and governments — behaves.
According to the Bloomberg newsletter on September 30, 2022, the Fed keeps raising interest rates to restrain high inflation, the S&P 500 fell as much as 2.9% overnight, while the Nasdaq 100 was dragged by 6.1% equivalent to a $120 billion wipeout.
When I enter the stock market, I pay more attention to the economy and market news, as the example above. Indeed, everyone is affected by inflation; you don’t need to be in the stock market to feel and acknowledge the impact.
However, when you invest your money in the market, you feel obliged to keep updated and learn more about what is going on in the economy right now, which will help you understand macroeconomics in deeper level.
4. Supply and Demand
I rarely look at the chart, but I do pay attention to the volume of transactions. I usually bid in the lowest price with a high-volume transaction; however, it may take a few days to match the price.
I also look at the running trade to determine which companies are currently trending in the market. From there, I’d like to analyze what’s going on, what caused that massive transaction, and try to identify market patterns. You can also use this information to earn more money in the future.
5. It Messed Up Your Psychology
FREN was the first stock I purchased; everyone said it was going to be a jackpot. A few weeks later, the price dropped. I sold the stock at a low price. The volatile market kept me worried and anxious all day.
I sold all of my stock due to a personal problem; when I returned to the market, everything became easier; I no longer feel anxious because I invested my money for the long term in a company that I carefully selected.
Today is day 5 of seven-day writing challenge. I have no idea of what I should write, found this on my draft, so here we are. Still zero improvement with my English, this is frustrating :(
But anyway, thanks for reading, cheers!