In Conclusion

Prior to the Unit 2 Assignment, I did not know nearly as much about my genre as I do now. After completing my research and interviewing an expert, it is clear to me that there is a discourse community in the stock market analysis / knowledge genre. Most Americans are busy with other parts of their lives, so not many people become financially literate. Even after this assignment, I still don’t know nearly as much as I could about stocks and the economy. This was definitely a good starting point though to learn more in the future. The fact that there are millions of financially illiterate citizens means that those who are experts in this genre have a high chance of doing well.

I think the most memorable thing I could have learned from this assignment is to stick with the market even through its tough times. If I complete a stock portfolio and it starts to dwindle for a while, I need to stay patient and let the economy bounce back like it always does.

fredgraph(1) (http://research.stlouisfed.org/fred2/series/WILL5000INDFC)

This graphic shows the yearly up and downs of the American economy. It is obvious that there was a major crash in 2008. Donald Dutkowsky explained to me that so many people backed out of the market during this time and lost a lot of money. The people who stuck through the tough times were eventually rewarded, as the economy bounced back after a rough 2008. I acquired a lot of valuable information through this assignment that will not only help me now, but also in making decisions when I am older.

cash symbol(http://www.clker.com/cliparts/k/z/z/b/3/x/money-md.png)

(https://www.youtube.com/watch?v=PBwAxmrE194)

Classic song from Wu Tang Clan. I think the song title (Cash Rules Everything Around Me) goes well with my Unit 2 research.

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An Expert’s Input

I came across several questions when doing my research. My classmates and I were assigned to give an interview to an expert in our specific genre – my genre being stock market knowledge or analysis. When we first received this assignment, I thought of interviewing a professor here at Syracuse, or my cousin who has knowledge in this field. I ended up emailing an economics professor named Donald Dutkowsky to ask if he was willing to take part in an interview. He agreed to the interview and was eager to give his advice on what he knows about the stock market.

I met with professor Dutkowsky in his office at Maxwell School. I started off by asking him what he knew about the stock market and he had a lot of information to share with me. He started off giving some of his advice on how to and how not to use the stock market. “Never be in the market for a short term period of time, do not constantly buy and sell stocks, and do not back out of the market when it is trending downward” (Dutkowsky, Donald. Personal interview. 2 March 2014). Also, “Be in the market for the long haul, so you can take advantage of the positive trends. If you bail out during a tough time, you’re locking in your losses. Choose a diversified stock portfolio, don’t rely on one company. Put your savings into an index fund (first introduced by John Bogle), which uses a diverse range of stocks and relies on the economy doing well. The economy usually bounces back from hard times, so index funds are a smart investment” (Dutkowsky, Personal Interview).

I continued by asking Professor Dutkowsky why index funds are such a smart investment. Just to be clear, the exact definition of an index fund is:

A type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor’s 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover

(http://www.investopedia.com/terms/i/indexfund.asp).

So, basically, putting money into an index fund is smart and efficient because there is a small chance of losing money and a good chance that the money will grow with the economy. I had never known that before Dutkowsky informed me, so in the future I will consider creating an index fund. He shared other information during the interview as well.

Professor Dutkowsky described that rate of return is the best measure of stocks. This formula can be explained as the stock’s price now minus its price this time last year divided by its price this time last year (Dutkowsky, Personal Interview). He also explained that there are two major benefits of holding stocks: 1) dividends made from stocks can be used as income or be re-invested. 2) capital gain – when a stock’s price increases. He also explained that you should have a goal when investing, so you know when / if you should back out, and the annual rate of return in the market is 9-10%. There were a couple other pieces of information he gave me. One being that Albert Einstein once said that the most powerful force in the world is compound interest – a formula that shows how money grows on a yearly basis. The other thing he mentioned was the 100 rule. “Take your age away from 100, that should be the % of your money invested into stocks” (Dutkowsky, Personal Interview). I thought what he said was crazy at first, but explained that investing a high percentage of your saved money into an index fund will only be beneficial down the road. I believe as long as you do your due diligence, Dutkowsky’s advice make sense.

My interview went very well with Donald Dutkowsky overall. He helped me better understand my topic for this assignment, now I will be able to translate this information to other people too.

Pay Attention

After continuing research on my topic, I decided to narrow down my question to “How can I benefit from stocks?” I decided to make this my question because the research I’m doing in this class may help me some day when I decide to put money into stocks. I made the title of this blog post “Pay Attention” because that’s exactly what I need to do during my research to get the most out of it.

I found an online article through ProQuest titled “Factors that Make the Stock Market Crazy” that helps break down the confusion of the stock market. “Some market movers are obvious, while others creep up on us unseen” (Ken Little, Factors that Make the Stock Market Crazy”). I think this quote from the author is useful because it gives a good description of the market in one sentence. Obvious market movers include inflation, interest rates, earnings, oil / energy prices, war, crime, etc. The problem with market movers is that they are so unpredictable; If there is any sudden change in a market mover, that could result in a significant bump up or down in the market. “If you have had your eye on a stock, but felt it was a little over-priced, one of these market events might just take enough wind out of its price to put it in your buy range” (Little). What the author means is if I want to buy an oil stock, but the price is too high, I can wait for the stock’s price to eventually drop. Buy while it’s low, and then sell high when the stock reaches its potential again.

In another article, “Stock Market Millionaire,” by Simon Thompson, he compares the stock market to a game show:

What’s the easier way to make a million? Knowing the                                  stock market so well that you can profit from proven                                   phenomena? Or entering TV quiz Who Wants to be a                                  Millionaire to profit from your general knowledge? Both                            could be highly lucrative if you know all the right answers.

(Thompson)

I liked this quote from Thompson because it makes a valid point about investing in stocks: it’s not easy to make a lot of profit, but it is possible if you know what you’re doing. The same point can be made about a game show for money. It all depends on the investor’s expertise and a little bit of luck, which proves there is a level of discourse community in this genre.

Rise and Fall of Stocks

For my blog post, I decided I want to research the rise and fall of stocks in the American market. This is an area of interest to me because I took a class in high school where we put together stock portfolios and watched how each stock’s value would rise and fall daily. I started to realize how hard it is to predict how stocks will trend on a daily, weekly basis and I wanted to learn more. So I searched on Google, “rise and fall of the stock market” and came across an article called “How Stock Market Trends Work” by John Barrymore. He goes through several factors that affect the changes in stock market trends, different markets that exist, and smart ways to invest your money. It seems complicated, but I think it’s a skill that if mastered could be very beneficial to an investor. Specifically, I think the genre my post falls under is stock market analysis. As I do more research, I’ll narrow down my search into less of a broad question.