Stock Market (1)

Stock market – Introduction

It was a cold, clear sunday morning in october, when I went to see the participants of the Bucharest-marathon, as they ran, jogged or walked along Calea Victoriei and took a right turn into Stribei Voda. A few co-workers and friends were in the race and I showed them my support and cheered, when I spotted one.

Then I was tapped on my shoulder, turned and recognized Dan, a buddy who recently started to save some money (see chapter 1).

‘Why are you just watching, not running? he smiled.

‘I already ran a marathon and did finish the race’, I proudly replied.

Dan was curious. ‘The Bucharest-marathon? What time did you make?’

‘No, I made the New York marathon in 4 hours 27 minutes, back in 1999’ I told him truthfully.

Later, over coffee and pastry in a nearby hotel, I had to tell Dan something about his money savings.

‘Speaking of marathon, do you know, that with the interest rate of 2 percent per annum on your cash deposit-savings, it will take you 36 years to double your investment?’

‘You’re joking, aren’t you?’ Dan couldn’t believe it.

‘I’m serious, this is the reality and with interest rates falling globally, it might take you even longer, if your bank cuts the deposit-rate, what will happen sooner or later.’

Then I explained the ‘rule of 72’. Dan remained silent for a while, and that’s rather unusual.

After processing this information, he hopefully glanced back at me: ‘Isn’t there a way to earn more and quicker, I don’t want to wait so long.’

‘What do you now about the stock market?’ I asked.

‘Nothing’ he replied ‘but if I can earn more, I want to know everything’.

The situation Dan finds himself in, might be familiar to a lot of people. They want to earn more, they know there is something out there called stock market who promises huge profits, but they really don’t now how to start.

Beside some capital, it’s knowledge, information and risk awareness that are among the most important factors to start as an investor at the stock market. And there is a lot more any investor should be aware of. Therefore we will explore some of the basic mechanics of the stock market in the next few chapters:

• What you have to know about the stock market

• How do you get and process information about stocks

• The biggest risks with stocks and what mistakes many investors make

• How the best investor in the world is picking stocks and what everybody can learn from Warren Buffett

Next chapter: http://www.theleader.ro/stock-market-2/