How many of these facts are a surprise? Some of them may even assist you in increasing your earnings!
“The stock market is a device for transferring money from the impatient to the patient,” Warren Buffett has said in the past. However, if you’re not only patient but also knowledgeable about stock investments, you can reap the rewards and build wealth.
When parties resume, here are 11 things you should know about the stock market, some of which you can use to your advantage as an investor and some of which you can use to impress your friends. See how many of the following things you didn’t expect to find.
Stocks have been in existence for a long time.
As a starter, stocks have been around for longer than you might think. As early as the 11th century, when agricultural debts were traded on the French stock exchange, and as late as the 16th century, when Belgium developed a more sophisticated debt market, you can trace the origins of the modern stock exchange. The Dutch East India Company, which was founded in 1602 and engaged in trade between Asia and Europe, appears to have been the first publicly traded stock. On the Amsterdam Stock Exchange, investors could buy and sell the company’s stock.
A group of 24 gentlemen gathered under a buttonwood tree in 1792 to form the New York Stock Exchange, which is the oldest stock exchange in the United States.
There are a few things you may not know about “The Dow.”
The term “the Dow” is often used to refer to the US stock market, but the Dow Jones Industrial Average is a stock index made up of 30 companies, not the entire market. There are a few new names on the roster, including Apple, McDonald’s, Nike, Walmart, Visa, and others. Since the Dow is price-based rather than market-capitalization-based like many other major indexes, the price of $267 will influence the index more than $21.
It recently traded at $319,571 per share for a single stock
It’s hard to believe that one company’s stock recently traded for more than $300,000 per share, but it is. As of the time of this writing, a single Class-A share of Warren Buffett’s Berkshire Hathaway trades for $319,571 at the current share price. Berkshire Hathaway’s shares are one of a kind, trading at a price in the four digits. Class-B Berkshire shares, on the other hand, trade for around $213 per share at the time of this writing.
The fourth reason is that only 55% of Americans own stocks.
As a result of news coverage, it appears that most Americans are interested in the stock market. According to a Gallup poll conducted in April, only 55% of Americans believe this. Since Gallup began asking the question in 1998, the answer percentages have ranged from 52 percent to 67 percent.
No. 5: There are more mutual funds available than you might think.
Many people mistakenly believe that there are hundreds of different mutual funds to choose from. In reality, there are many thousands. According to the Investment Company Institute, there are over 6,000 stock funds in the United States and over 100,000 funds of all kinds (stock, bond, ETF, money market, etc.) around the world.
No. 6: After a crash, the stock market usually recovers fairly quickly.
In spite of what many investors fear, corrections and crashes in the stock market are inevitable. The news isn’t all bad, but it’s going to be a bumpy ride. From 1950 to 2019, the Capital Group examined the stock market’s performance and found that 10% or more pullbacks (often called “correction”) took place on average once a year and lasted approximately 112 days. How long will it take to complete this task? Even seven-month recoveries aren’t terrible, even if they last twice as long. About every four years, drops of 15% or more lasted an average of 262 days (roughly eight and a half months), while drops of 20% or more (crashes) lasted an average of 401 days (roughly 12 months). Everything can change at any time, so these are just averages to keep in mind, but big drops in the stock market are usually followed by a quick rebound. For long-term investors, it is important to keep in mind that market drops can provide excellent opportunities.
No. 7: The stock market in the United States accounts for about 55% of the global market.
Despite the ongoing pandemic and the resulting job losses and business closures, the stock market in the United States is still near its all-time highs at the time of this writing — and the stock market in the United States accounts for the majority of the total value of all stocks in the world. In particular, the Credit Suisse Global Investment Returns Yearbook estimates that it accounts for 54.5 percent.
No. 8: There is a stock market for pirates as well.
There are, of course, stock and bond markets where investors can buy and sell shares of companies that provide a variety of goods and services. Is it not surprising to learn that even pirates once had a market? In 2011, the Wall Street Journal reported, ” “It was established in Harardheere, Somalia, in 2009, which is about 250 miles northeast of Mogadishu. The exchange is open 24 hours a day and allows investors to profit from ransoms collected on the high seas, which can reach $10 million for successful attacks on western commercial vessels..”
Bonds, on the other hand, tend to have lower yields than stocks.
We tend to think of stock and bond investments as separate entities, but dividends from stocks can be a significant source of income. Many dividend-paying stocks are offering yields that are higher than many bond rates because of the prolonged period of ultra-low interest rates. For example, five-year Treasury bonds recently had a yield of 0.33%, while one-year bonds had a yield of 1.57% (for a 30-year maturity). Check out the dividend yields of some of these companies, as well:
Just a few of the many “Dividend Aristocrats” — companies that have paid a dividend without interruption for at least 25 years — are listed above.
Innumerable financial markets have been rocked by the popping of speculative bubbles
To assume that the modern era and stocks in modern companies are the only places where stock market bubbles burst—speculative frenzies of rising prices that eventually crash to the ground—is an oversimplification. Not at all. These kinds of frenzy episodes have occurred repeatedly over the past several centuries. Holland experienced a tulip bubble in the 1600s, and England experienced a bicycle company frenzy in the 1800s. Many more examples can be found by doing some research on the internet. Extraordinary popular delusions and the madness of crowds by Charles MacKay and A Short History of Financial Euphoria and 1929 by John Kenneth Galbraith are two excellent (and occasionally amusing) resources on the subject.
No. 11: It’s not a secret how to be a successful investor.
Last but not least, here’s a startling statistic about the stock market: Despite the fact that making a profit from it may appear to be a daunting task, it isn’t. Investing in index funds is a low-risk, high-return option. You can also learn from some of the best books and the best investors. For example, Warren Buffett has given numerous speeches and penned numerous articles and letters in which he shares his wisdom.
In the stock market, you’ll find that the more you learn the more fascinating it becomes. Additionally, as your knowledge grows, so could the value of your portfolio.
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