Stocks Are at Record Highs. Here's What New Investors Need to Know.
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What is the main topic discussed in this episode?
Here's your money briefing for Monday, April 26th. I'm J.R. Whalen for The Wall Street Journal. Chances are you've heard that stock markets are at record highs.
Why should new investors care that stocks are at record highs?
Maybe you've been hearing people talk about their stock picks on Robinhood or one of the other new trading apps, and you thought, maybe I should get in on the action. But how? There's more to it than what you see on social media.
One of the things that a lot of financial advisors see when they're looking at this sort of Robin Hood crowd is that there tends to be a lot of trend chasing, a lot of investors sort of grabbing onto hot stocks at the moment that are really talked about. But what I think more long-term investors really like to see is that people sort of consider a much broader basket of stocks.
It's investing week on your money briefing. All this week, we'll be covering the ins and outs of different kinds of investments, the benefits and the pitfalls.
How do social media and trading apps influence beginner investors?
Today, our markets reporter, Akane Otani, will break down the basics of stocks. That's after the break.
You probably know that buying a stock lets you own a little piece of a company. But after that, maybe things get tricky. People throw around buzzwords like growth stocks or value stocks, stocks that pay dividends. Maybe you've heard about ETFs. There's a lot to know. We're going to break it all down for you with our markets reporter, Akani Ohtani. Akani, thanks for being with us.
Thanks for having me.
So Akani, you cover the stock market extensively. What are the most common questions that you get asked about investing in stocks?
What common mistakes do advisors see among Robinhood-style traders?
A lot of times it's just when we see something really running up a lot in the markets, whether it's GameStop from a couple of months ago or something like Tesla or Facebook that's always sort of hot and talked about. A lot of times it's people just asking, you know, should I buy this stock? And they're kind of joking because they know as a reporter, I'm not allowed to give financial advice. But I think the question really just points to, you know, when people see something being talked about a lot and written about a lot in the news, there's this tendency to think, like, I'm missing out if I'm not invested in this. Or maybe I already missed out because I'm not invested in this.
Yeah, with so much chatter online about certain stocks, it's got to be tempting to jump on the bandwagon. So what does stock market veterans say about that?
thing that i hear a lot of financial advisors talk about is that they really recommend not just thinking about stock selection so picking one or two stocks that you're interested in but really thinking of a broader more diversified portfolio so one of the things that a lot of financial advisors see when they're looking at this sort of robin hood crowd is that there tends to be a lot of trend chasing a lot of investors sort of grabbing onto hot stocks at the moment that are really talked about. But what I think more long term investors really like to see is that people sort of consider a much broader basket of stocks. So maybe instead of picking one or two companies that you're interested in, maybe you might consider a couple hundred companies via an exchange traded fund or a mutual fund.
And we'll be talking about those in a bit, but let's first get into some basics, like how stocks even work.
How do corporate earnings and news drive stock price movements?
Everybody knows that stock prices go up and down, but why really? What kinds of factors cause a stock price to rise or fall?
There's really so many different factors. One of them I think it's pretty obvious is the corporate earnings reports that come out every quarter. Usually investors like to invest in things that they think have the potential to grow a lot and to do better in the future than they're doing right now. So earnings reports released quarter by quarter give investors a good picture of how a company is doing and also what a company is forecasting for its future. So typically after an earnings report comes out, we tend to see quite big swings in certain share prices. And even just in the conference call that will follow an earnings report, where we'll see the executives of the company taking questions from reporters and analysts, that's when we'll see a lot of stock price moves as well.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:05–0:13
2
Why should new investors care that stocks are at record highs?
0:13–0:54
3
How do social media and trading apps influence beginner investors?
0:54–1:34
4
What common mistakes do advisors see among Robinhood-style traders?
1:34–3:14
5
How do corporate earnings and news drive stock price movements?
3:14–6:39
6
When can social-media driven moves like GameStop defy fundamentals?
6:39–8:22
7
What is the difference between growth stocks and value stocks?
8:22–10:30
8
How do dividends and dividend aristocrats affect investment income?
10:30–13:04
Speakers
2 identifiedMore from WSJ Your Money Briefing
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