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Myths and Misconceptions

The thing about the stock market is that it is complex. It has so many variables within it that you really need to analyze when investing. There are a lot of people who don’t know anything about the stock market, other are unaware of different aspects that are highly influential.

There are myths and misconceptions that surround the stock market. For example that the stock market is only for the suits, the Wall Street businessmen and the rich. That you need to be a millionaire to invest and that the only people turning a profit are the millionaires or individuals that are cheating in some way such as insider trading. Also with all these online trading sites people don’t have to have an investment advisor which earns 10% commission off your earnings, you can do it yourself.

At a college such as Bowling Green State University the assumption that students would at least have some grasp of the stock market. However, upon interviewing some of these students, you’d be surprised with the results.

Paul Barney, a senior at BGSU graduating in May with a major in print journalism and a minor in popular culture. At the beginning of the interview at the mention of the topic being the stock market Barney replied, “I don’t know anything about the stock market.”

“I mean I know the basis of the stock market but not a full understanding of it. The stock market would definitely be something I’d look into if I had more money. I want to be like that guy from the Social Network (Eduardo Saverin) and make $300,000 over the summer.”

This phenomena isn’t just limited to BGSU. Darin Young a senior at Slippery Rock University has some interest and knowledge in the stock market. He was unaware though of various elements of the stock market.

“I didn’t know that,” exclaimed Young upon finding out that the government added an extra tax on earnings determined on the amount of duration the stock is kept before it is sold.

Young, was interested in purchasing bank stocks such as AIG, after the $700 billion bank bailout but choose not too because of a lack confidence and knowledge of the market.

“I wanted to invest in AIG, but I didn’t really know what I was doing. I was going to talk to some of my economic and business professors about what they thought but never got around to it,” said Young.

Associate financial advisor, John Lung of Ameriprise Financial put all these myths and misconceptions to rest, “These are all definetly not true. Indvidual investors can use their 401K, have a pay deduction to acquire mutal funds. People could also use IRA’s. Anyone can invest,” said Lung.

On the regards to insider trading, “Obviousily that’s a no, no. But it does occur I’m sure. But that’s not the only way to earn a profit. You can earn profit by studying the market and diversifying,” said Lung.

You don’t have to be a millionaire or even an avid researcher in evaluating the market to determine the precise stocks to invest in. The main thing you really need to have is common sense. The common sense to realize the shifts of the market, the variables, and the impact they have. An easy task, right?

Yes, there are so many variables of which I’ve talked about multiple times but you can really condense these different facets into some generalities. For example take into account facts, oil is going to one of the most valuable commodities until it runs out, Russia is the largest producer of wheat and Japan is the home of Toyota and Honda. So invest in oil, Russia had fires across the land destroying wheat fields which if you know general economics supply decreases, price increases and with all the events in Japan Toyota and Honda are going to be impacted negatively on multiple levels such as production, sales, prices of parts will increase.

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