My Initial Research About Stock Markets: Investing in a stock market is quite simple, it only consists of buying a small portion of a company, and if the company becomes successful, you get a certain amount of money back. A share and a stock are slightly different. The stock is the official certificate that you own part of companies, on the other hand shares refer to the ownership certificate of a particular company. A dividend is a payment given to the shareholders, made by the company that can also be re-invested into the company. Dividends usually vary over time for big stock exchange markets such as NYSE (new york stock exchange), LSEG (london stock exchange group) and NASDAQ (national association of securities dealers automated quotations). These huge stock markets and most companies over the world have ticker symbols, an abbreviation of the company’s name for quicker identification. For example, Netlix’s ticker symbol is NFLX whilst Apple’s ticker symbol is AAPL. These symbols have to stay unique to the company to avoid confusion when dealing with stocks.
When you either don’t want to invest and end up losing money, or you don’t have much money to start off with, a mutual fund is quite helpful. It allows a group of people to invest together towards purchasing a collection of stocks, bonds or other securities that are harder to recreate on your own. Supply and Demand is a fundamental theory of economics, used to describe how a command economy works. Supply represents how much the market can offer while demand refers to how much of a product is desired by buyers. This concept affects the stock market because when demand for a stock increases, companies purposely increase the price. But on the pros side, when there is little to no demand for a stock, the price decreases almost instantly; so, it can go in both ways.
The First Three Stocks I Invested In: Johnson & Johnson is a company that does quite a lot of different things: beauty products, medicine etc. With this, they are more likely to sell more since they offer a bigger variety of things. Also, my best friend who lives in Pennsylvania, her father works for J&J and he is quite successful. I have both an emotional connection to it, and I feel it would be a company that is constantly doing well.
The second stalk I invested in was Goodyear. My father works as the head of finances for Europe, Asia and Africa for Goodyear/Dunlop. So, I thought it would be interesting to see how much money I could make from a company that I am familiar with. Also, tires are needed by every person who owns a car, therefore the sale numbers are quite big.
Lastly, I decided to invest into Netflix because it is a tv program that I use a lot, and that in the future I would consider investing in. Also, I would be interested in how much an entertainment company could give back to an investor, since it isn't really selling products directly: it is for entertainment purposes only.
My Reflection During Stage 3: Starting off this project, I invested in J&J, Goodyear, Netflix, Adidas and McDonalds. I was confident at the start that these companies would do well, but slowly I found myself being in the lower end of the class and my return would be in the negatives. I was determined to get in the top 5 so I started dropping companies one by one, once I saw they would be below 0. I also attempted to add companies like twitter because it had spiked up incredibly quickly, but it just as quickly left my portfolio because it decreased as soon as I bought it. Consequently, I got rid of Twitter, McDonalds, Johnson&Johnsons and Goodyear; which left me with only netflix and adidas. When I only had these two companies left, I was ranked 12th and I spent some time thinking of what I should invest in next. However, I woke up one morning and saw I was ranked 2nd and that Netflix’s stock increased over 15%. A launch of a completely new Netflix based series and new episodes of some of the biggest shows had just been released.
My Final Reflection: This stock market project taught me a lot of things; mainly how to invest in companies and how to manage what to keep inside my investing wallet. I started of with three companies that were closer to my heart: companies that I used or companies that I had family members working for but quickly I became competitive and wanted to win; therefore I let go of some companies. One of my first three companies stayed with me all the way to the end because of its stellar percentage. Netflix was always in the positive range, but about halfway through the project, it rose rapidly in one night. Going from about 6-7% to 35% overnight. This stock increased rapidly because Netflix had just come out with a netflix based series, and some season finales of popular series had just come out. Even though this huge increase in my portfolio did manage to keep me in first or second place for a couple weeks, there are many things I would’ve changed about the approach I had to the project. Firstly, I would’ve done slightly more research at the start of the project to find some more successful companies that would’ve kept me in the top two spots longer. Secondly, I wouldn’t have relied on my one successful stock for so long because one day, Netflix did decrease a significant amount from its 35% and I lost my high ranking position. Lastly, I would’ve loved to try and invest in companies that nobody else invested in to give myself an edge; but my competitive spirit did take over and told me to stay with what was doing good at the time. At the start of this project, I didn’t have a clue what I was dealing with. I wasn’t even able to give a definition of investing, stock, stock market, or trade. As the weeks went by, I forced myself to learn more and more so that I could understand better, and win as well. Investing in the stock market isn’t always simple. Obviously, you want the best companies, but if one particular company reaches its peak, if you buy it after the increase it doesn’t bring you as much as it did for the people who invested in it before. Investing is also really strategic, and in the way we used it, we tried to figure out what each person was doing to replicate or beat them; whereas in real life, investing is more of a personal thing. I’m glad this project was handed to us because I learned about something I didn’t even know existed and in the future, I could consider applying the learning I did in class and invest in stocks.