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  • Thank you to Curiosity Stream for supporting PBS Digital Studios!

  • Have you ever thought about investing in the stock market?

  • Maybe you have a cousin or a co-worker who's always talking about how theirportfolio

  • is doing, and you thinkMaybe I should be doing that, too…”

  • But then you do a little research and it sounds like this:

  • [CACOPHONY OF RAPID FIRE FINANCIAL CABLE SHOWS CLIPS WITH LOTS OF CRYPTIC JARGON AND ALARMIST WARNINGS] WARNINGS]

  • Yikes.

  • Y'know, it reminds me of the time I walked up to a craps table in Vegas.

  • The rules were so complicated and confusing, how could I justify plonking down my hard-earned

  • money on a game of chance I barely understood?

  • A lot of people feel the same way.

  • Half of Americans have $0 invested in stocks.

  • Many of them don't have spare money to invest, but some might think it's just for risk-taking

  • high rollers.

  • But is the stock market just a big casino?

  • Or is it something that you should be making a part of your financial plans?

  • [MUSIC]

  • What exactly is a “stock”?

  • The concept was invented in the 17th century by the Dutch East India Trading

  • Company which wanted to allow multiple investors to underwrite their expeditions, so they sold

  • shares, or percentages of the company.

  • It worked out well for Dutch East India, making them the biggest company in the history of

  • the known universe, with a value greater in today's dollars than Apple, Google and Facebook

  • combined!

  • Today you can buy stock in companies of all sizes, betting that the business will do well

  • and the value of your shares will increase.

  • Smaller, newer firms are more risky, because while there's a chance they could be the

  • next Uber, there's a much bigger chance they could go bust.

  • Larger, established companies aren't quite as exciting, but they're a lot more stable.

  • I mean, who doesn't think Coca Cola will still be selling soda tomorrow?

  • That sounds a lot like the odds at a horse race.

  • Bet on the favorite to win a little bit of money, or go for the big bucks by risking

  • it all on a long shot.

  • So, why not skip the brokerage fees and just go to the racetrack?

  • When you look at the stock market up close, it can sure seem like a gamble.

  • But you might be missing the forest for the trees.

  • For instance, track one company's share price for one year, and it looks like a wild

  • ride.

  • Who'd put their savings on that roller coaster?

  • But let's take a few steps back.

  • Instead of just one company, let's look at a bunch of companies, and instead of one

  • year, let's look at 90.

  • The S&P 500 Index is a measurement of how 500 of the biggest companies have performed

  • over time, and since 1928, it grown by an average of 10% per year.

  • Sure, there are still ups and downs, but what looked completely unpredictable up close,

  • from a wider perspective tells a different story.

  • So how do you get your portfolio--the collection of stocks you own--to mirror that steady increase?

  • The two main tactics are diversification and long-term investing.

  • Stock diversification means owning stocks from a lot of different types of companies,

  • which protects you from the volatility of any specific sector.

  • And long-term investing, owning stocks for at least 10 years, protects you from the volatility

  • of any one bad day.

  • Even a really bad day.

  • When the market crashed in 2008, many people rushed to sell off their stocks and just ate

  • the losses.

  • But those who could stay in eventually made that money back--plus some!

  • Behavioral economist Richard Thaler actually recommends not even tracking your portfolio

  • at all.

  • People who check the price of their shares regularly tend to get spooked and sell them

  • when they temporarily dip, which is basically guaranteeing that they sell them for less

  • than they bought them--the number one no-no of playing the stock market!

  • These strategies reveal how different from a casino the stock market actually is.

  • Casinos in Las Vegas have payout percentages that average in the mid-90s, meaning they

  • pay back in winnings around 95% of the money that is gambled.

  • So if you played Las Vegas like a stockbroker, diversifying your portfolio by playing a bunch

  • of different types of games, and long-term investing by keeping your money on the table

  • whether you win or lose each day, you can be fairly certain that you'd steadily lose

  • 5% of your savings.

  • It doesn't take an economist to tell you that losing money and making money are two

  • very different things.

  • Of course, there is still some risk involved.

  • Even a diversified portfolio can take a dive, and when life deals you a bad card, you might

  • need that money now, not 5 or 10 years down the road when the market goes back up.

  • So is it smarter to just keep your money in a savings account?

  • Well, not playing the stock market carries its own risks.

  • As employer-funded pensions become less and less common, Americans are increasingly on

  • their own when it comes to saving for retirement.

  • And as companies continue to grow and everything gets more expensive, if your savings are not

  • somehow tied to the overall growth of the economy, you can get left behind.

  • So...where do you start?

  • Most people buy and sell individual stocks through companies called brokerage firms.

  • It's actually pretty easy to set up an account, and they offer guidance on how to invest your

  • moneyfor a commission.

  • Of course, you can always pick stocks yourself, but if you're new to it, that can be as

  • risky as a slot machine.

  • Another, more common way to own stocks is through mutual funds--you might already own

  • some in the form of a 401(k).

  • These are pre-assembled bundles of stocks and other investments that are designed in

  • advance to be diversified, which spreads out the risk--and makes them less of a hassle.

  • We'll be covering mutual funds in more depth in a future episode.

  • Like any big investment, the smartest first step is to seek the help of an investment

  • advisor who is a sworn fiduciary, who can help you make a plan that best fits your unique

  • situation.

  • Remember, even if you keep your savings in cash under your mattress, you're still a

  • part of the larger economy.

  • Which means, in some sense, you're already invested in the game.

  • So you may as well be playing with some strategy.

  • And that's our two cents!

  • Thank you to Curiosity Stream for supporting PBS Digital Studios!

  • Curiosity Stream is a subscription streaming service that offers documentaries

  • and non-fiction titles from a variety of filmmakers, including Curiosity Stream Originals.

  • For example, you can watch 1929 to hear more about the ups and downs

  • of the stock market.

  • You can learn more at curiositystream.com/twocents,

  • and use the code "twocents" during the sign-up process.

  • Do you have more stock market questions? Post them in the comments and we'll try to answer them!

  • And if you have your own experiences with investing in stocks, we'd love to hear em!

Thank you to Curiosity Stream for supporting PBS Digital Studios!

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B1 中級 美國腔

股市的風險有多大? (How Risky Is The Stock Market?)

  • 44 1
    Mackenzie 發佈於 2021 年 01 月 14 日
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