I know it isn’t going to win me any fans to admit that I am really clueless about the stock market, but I am. It’s one of those things that I know just enough about to be able to smile and nod with some confidence, but not enough about which to carry on any conversation beyond, “Wow…I can’t believe what a hit [insert the name of whichever company NPR reported taking a dive in the market] took today.”
I determined that I would learn about it. And then, I found myself fixating on the shape of the font Wikipedia uses, and how much I like their logo, and not at all on what I was reading. Try again tomorrow. Or, if any of you care to enlighten me further than the following, please do! I’m all eyes.
As I understand it (and I understand it only because David Bowie sold stock in David Bowie and I really wanted some–rock stars, driving my self-propelled educational interests since 1982), companies that are publicly traded allow investors to buy shares in their company. It’s a bit like if a landowner had 4,000 acres and decided to sell parcels of land to ghost owners. The Ghost Owners would profit based on the production of all 4,000 acres, regardless of which parcel of land they owned. Worth would be determined by how many parcels of land you had purchased, based on the percentage of land made available by the Land Owner.
Worth would also be determined by perceived value. If no one wanted your land parcels, they wouldn’t be worth much, and you would have to offer them at a much reduced selling price to entice buyers. If everyone wanted a piece of your action, you could charge out the wazzoo.
Perception would be determined by past and projected performance, and on speculation as to whether or not the land had staying power. If the Land Owner hasn’t rotated crops in 4 years, one might speculate soil depletion and devalue the price of the land parcel, thus devaluing the shares. If the Land Owner has taken exceptional care of his land, and has just invested in improvements that will increase his ability for output next year (even though the improvements cost some money) one might speculate a boom and value for the shares would remain stable or increase.
If too many people wanted out of their shares at once, the Land Owner could face financial doom–that’s his backing to run the company. Shares are sort of a loan from the public, and the health of the stock has a lot to do with the health of full finances.
I have no idea the difference between Bull and Bear markets. I don’t like getting animals involved. I feel sorry for them. Like what Republicans have done to Elephants–poor things! But, I think Bull markets are good, and Bears are bad. Yes, moneyinstructor.com confirms this. I will remember this as: When the market is good, take the bull by the horns. When the market is bad…well, some days the bear gets you. Or I will remember the toilet paper commercials with the baby bear, who frequently has bits of toilet paper stuck to his bum…bears are nasty. Who came up with that? That’s gross. Ooh! Or, I will think of the Snuggle Fabric Softener bear. When the market goes south, you need snuggles.
Yeah. So this is what it looks like when Lib Arts majors show an interest in the stock market. Please feel free to fill in gaps, correct misunderstandings, or just agree with me that it is nasty to suggest that people who use Angel Soft go around with bits of toilet paper stuck to their backsides.