On the 16th of September, I embarked on the journey into the world of Stocks with the help of a virtual version of it ONLINE! It couldn't be a real one, mainly because I'm 14, which means I cannot be trusted with a lot of money. Starting off with 10,000 euros, I researched, questioned and discovered quite a lot on the 3-4 months I have spent on this project.
Before that here's a bit of research I was able to do before I began:
Stocks have been part of our lives from a very long time. Starting off with sharing in parts of Venice in the 1300s to having the first stock exchange in Antwerp without really any stocks, our world has evolved and changed the system around quite a bit. But nevertheless, a stock is the general term people use to say they have ownership of a certain part of mostly any company. Whereas, shares are more or less the same except for the fact that this ownership is of a particular company. So, when one says they have a stock, it means they own shares in more than two companies, but if they say shares, it means it’s for a particular company.
The way stocks and shares usually work these days is all dependent on how well the company one chooses does. Take for example, one of the major markets in the US is NASDAQ or the New York Stock Exchange. Suppose we have about 34 shares in NASDAQ, and the same in NYSE, and for some extremely mysterious reason they do really well, let’s say a profit of 20%. Because these companies are really happy and they respect loyal shareholders, they’ve decided to share a small amount with all the people who have shares with them. Ever share now receives 10 cents, so we receive 3.40 dollars each from their profits. This way of giving away everyone with shares certain parts of a profit is called a dividend and it is also what really makes a stock market a stock market. But then one wonders how do we even buy shares? Well, one can choose to do all this online (mostly everyone does), or do it the more old school traditional way which is more with going to and fro from the stock exchange building.
Mostly to buy shares, one has to know a special code to (of letters) the company that has shares you want. This special code is called the ticker code in stock language. Most stock markets choose to keep the codes the same in every market, but some countries’ feel it better to have some different to make their lives easier, and hence it varies. That is why one should always make sure the code they are using is of that Stock Market.
Once you’re into this whole stock market thing, life could go slow for you with tons of waiting and waiting for the money to increase OR you could try being the gambler and sell or buy new shares which is a faster way to make money. There actually are people called Stock brokers in this world who do so with their shares, and they actually do have a pretty good income, but one also needs to have that confidence in their facts to be so. Although, this isn’t the only type of stock related way that one needs their guts for. Supply and Demand.
Let’s just say (as an example) that you have this amazing shoe you see in the store and you really want it. But because you’re the only one, the store guy isn’t that keen in putting the shoe on sale. Soon enough, a new promotional video makes people a little more aware of this shoe and now people are inquiring about this shoe. The demand for this shoe has increased, and now that people want to buy the shoe, the store has decided to finally make it available (the supply). Over time, the shoe becomes very popular, and now 100s of people come to buy it, so the store has two choices to tend to this increased demand- a) increase the price because people are desperate for the shoe or b) decrease the price so that people who couldn’t afford it now can (and increase the supply for it as well). This same example is applied in shares and stocks in all the markets around the world. When a company does well, the share prices go up, and the demand does as well because people want that extra money. The only difference is that in the stock market, a normal shareholder can choose to sell their shares if they want to and gain money, or they can hold on to it. The importance of supplying and the demand is HUGE in stock markets in the world, and most of it helps run it all. Of course, all this sounds like a lot of work for a normal person with a job, but it doesn’t always have to be that way.
In our ever changing world, we also have a way for lazy people to gain money through stocks and shares. You invest in a mutual fund, which is basically professionals doing all the worrying of stock markets and shares for you. All you need is enough money to do so, and just relax until you feel you don’t want to. Mutual funds are also a lot of times group projects, so selling and trading can be common, but you don’t worry about that, that much either with the professionals.
Overall, being a human and investing in stock markets is a very interesting experience and I’d be keen enough to try it later in life (after I see how my first attempt goes). It is a very benefiting and much more easier way for a person to gain money, especially younger adults who don’t have a proper and very good paying job. It does have it’s cons of crashing unexpectedly and people losing money, and sometimes that very long wait to get enough money to think of it as enough. In the end, I think one day, I will possibly be confident enough to invest in a company. :)
Credit to my Mom who helped me in understanding almost everything about the stock market + this site for showing me everything about a company
Happy with all the information I had, I decided to start investing with the initial 10000 euros.
Me when I saw them all IN THE GREEN!!
Later on, I decided to reflect on it. Here is my reflection from October 24th 2016, midway with the work
So far, I feel my stock project has turned to be a very strange mix. According to my stats from October 20th, it is sort of disappointing to see one of my favorite investments, P&G suddenly go down as of today, but I am not keen on selling it at such a low price. The cause is mostly because of a certain re-take of many of the shares because of certain debts they struggled with, which I am hoping will be gone pretty soon, because of how huge it’s branch of mini-brands is.
My best doing company though, is Google (of course), because of how popular it is as a search engine. Despite having only two shares in the company (Alphabet Inc: the founders), the price has reasonly gone up (one share costs 800!), and pretty soon, with the release of the Google phone as of today, it is likely to go higher up in profits.
Otherwise, I have Disney is slightly going down, but that is merely as more movies are yet to come, though there is a chance there recent release hasn’t fared well with the public. My recent investment in HDFC (2 days ago- October 18th) has so far started to earn quite a few profits, and I feel it is a good investment, as Rupee is quite cheap when in Europe, and the shares are a good amount to profit enough.
I did however decide to sell my shares in the Royal Mail, as the investment just kept decreasing every day, and I had no use of it. Also, the fact that Brexit’s effects are still to be seen in various UK companies, which makes investing in them during this year a huge risk. So I was able to gain money. Moreover, I decided to finally buy shares from Microsoft (mom’s suggestion)which is doing fairly well, with not drops as yet.
I do feel my portfolio would do better if I paid more attention to the news, and invested in companies that are likely to shoot up more. Plus, I have started to buy more shares so that the profits are worth it, instead of two. So far, I have found this Stock project quite interesting and hope the End result teaches me something!
Today: 2nd December 2016
My Final Rank : 19
Looking back from then to now...
This year, I feel the Stock Market project really taught me something. At the beginning, I was a bit worried and nervous, as I don’t really like dealing with spending on things that might make me lose money, but it did add on that awareness of checking one’s stocks everyday.
After reflecting back in October to looking at it now, I feel happy, despite the few drops I have seen in some shares. The most well-doing company I would say, is Disney because of how I believed in the release of their new Disney Princess movie will bring in more money for the company. It’s only been a week, but the shares are already promising. Otherwise, Google’s co-founder’s recent resignation idea has plunged down Google’s shares leading to a bit of a loss, but it was worth the try in buying the shares. The Indian company I chose to invest in (from my Hometown- Mumbai) didn’t do well, and has been in the red for more than 2 weeks, which is saddening but it isn’t too huge a loss. Heeding my mom’s advice on definitely buying Microsoft and listening to a friend in buying the BMW stocks, they have been in the green for almost all the time that I’ve had them.
Despite Donald Trump’s being elected as the new president, and quite a few stocks plunging down, Microsoft held its ground and it makes me feel proud, as a Microsoft user :)
One other company I never bothered to worry about has been in the red and decreasing for a while now, which is disheartening. There isn’t some specific reason, just the loss of certain brands of theirs to not do so well, and the huge competition: Unilever.
If I have the chance to redo this project, I guess I’ll be reading the news a lot more closely than when I initially researched on the topic. I am thinking of investing in the companies which can be trusted of staying the green longer with more profits, like Microsoft and maybe Disney (but closer to the release date of its upcoming good movies). Moreover, I am thinking of being more keen on selling more, and buying about the same amount.
Overall I have learned quite a lot from the Stock Market this year. It’s almost like how I spent time on the Personal Finance last year, but a bit more complicated than expected. It has made me look closely at the profits, check headlines and the news a lot more, to be up to date on any new changes, and be more conservative on money. I had been quite shy at the beginning because of not wanting to spend much money, but now that I look at it, it is better to invest in more and get more money faster, than spend less and take longer. Plus, 10000 euros might seem like a lot, but looking after investing and looking at all that happens as days go by, it seems too little an amount.
Loved this unit, and hope for more to come :D