Making Investing Easy to Understand

Every week we hear statistics on the economy in the form of numbers, percentages and fancy names we have for economic indicators.  But what really is going on?  Why was everyone so upset today?  Well there were a couple big disappointments that came out in the news, I am going to talk about one of them, the UNEMPLOYMENT RATE.  The unemployment rate rose from 9.1% to 9.2% in June.  At first one might think, “well it is only ONE percent, why is is such a big deal?!”  This little tiny 1% played a huge role in the markets dropping a large number of points immediately after they opened today.  Sometimes it is hard to understand how the stats are computed, what is left out and what is counted, so I will say it in a simpler way.  In the last 16 months there has been over 2,000,000 private sector jobs created in the United States, HOWEVER we have lost more than 8,000,000.  We are years past the “Financial Meltdown”, but we are no where near a recovery.  We need to be creating well over 100,000 jobs a month, but only 18,000 jobs were recorded for the month of June… this means big trouble.

So as an investor, am I stuck? The markets went down, if I take my money out I’ll incur a loss, if I put more money in, I could end up losing more, what can I do?  The truth is you not only make money if the markets go up, but when they go down too! Today I woke up at 3:30 am Hawaii time, I read the unemployment report and I knew, this was bad news.  When the markets opened and chaos filled the charts and tables on my computer screen, I waited for it to settle… about 15 minutes after opening bell I put my money in a special fund called an ETF or Exchange Traded Fund.  ETFs are becoming a trader’s best friend, they can do just about anything.  This particular ETF (BXDC) shorts the S & P 500 meaning the value of the fund goes up as the market goes down.  As the market took a dive, I watch my little ETF friend climb and climb until I felt satisfied with the gain and I sold it before it could drop.  In a day with so much chaos, a LITTLE knowledge went a LONG way

So what do these little economic indicators mean for you and your portfolio? your pension? your life savings? … EVERYTHING.  It is argued that 84% of returns are determined by macroeconomic news. If that is true, then it does not seem that important to stress over what stock to put your money into, and at some degree even, what sector to invest in.  Instead, at a time with so much financial and economic uncertainty, people of all different occupations need to learn some basics in investing,  so that they know what is going on with their money, and their future. Because just as spider man learned the direct connection between power and responsibility, with financial KNOWLEDGE comes great PEACE and SAFETY.

Abram, The Wall Street Surfer