Net Net TOUGH-2 Minute Stock Market Lesson from Your Neighbor

Course #9 of 9 – Why Does The Stock Market Go Up and Down

  • What’s the deal with the stock market?
  • What does it mean when the stock market goes up or down?

For any of you who are also self isolating or working from home in your remote office you’d understand this analogy… look over at your neighbor’s house… is he or she in their yard?
Imagine the stock market being equivalent to your neighbor over there yelling at you once a day when you back your cars out of the driveway and head to work in the morning. She says “I would give you X dollars for your house or I would give you Y for your house, right now no questions asked” and she’s just blasting out numbers…

The value of your house or what the value to the overall market of real estate buyers in the universe could be significantly different than what your neighbor is yelling.

What your house could provide you and others is completely disconnected from how she’s feeling or what she is offering you. If she’s grumpy that day or if she’s looking at your UNMOWED lawn leading her to think it should be less of a price or when the next day you mow it, and your yard looks great, or maybe you put out a new hanging basket or a bit of paint so she says she will give you more now. Really, she is just shouting out numbers. The stock market is exactly that!

People are shouting out numbers and the prices are going up and down. Quality businesses that generate profits and have for years that increase their dividends though up and down times, the value of that business is not necessarily reflective of the price you see on the Internet or TV. What you’re seeing in the market is you’re just seeing people yelling back and forth over the fence prices of your house.

Your Homework

Go to Google Finance and look at the Markets on the right hand side of the page. Look to see what the up or down percentage is (Green Up / Red Down). Then reflect back to the neighbor, either he is in a Green Good Mood, or a Red Bad Mood.

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