The Easiest Way to Learn About the Market
Over the last few days, everyone can’t stop talking about Gamestop, AMC, Bed Bath and Beyond and the meteoric rise in the stock prices of these companies and several others courtesy of r/wallstreetbets. I have mixed feelings about the whole saga but what I am thrilled to see is that more people than ever before are interested in investing in the market. But the largest obstacle in stopping people from participating in financial markets is not understanding how they work and what’s going on. This is my simple method for you to fix that.
When you ask most experts (I am definitely not one) how should you learn about the market, the classical advice is to go read a stack of books on financial theory or read the Financial Times or something similar. As a trader, I actually do this but to be honest, unless you live and breath finance, you’ll find these methods are dry, boring and leave you more confused than informed. Therefore, whenever someone asks me what book I recommend to learn how to trade or understand the market I don’t give them advice that won’t work for them. Instead, I recommend doing what I did as a teenager who wanted to learn about the market and how anyone interested in investing or a career in finance should start.
Watch Bloomberg Every Day
Bloomberg is one of the largest and most popular sources of financial news, so you don’t need to go hunting to find out what’s happening, it will be right there. Start by watching 30 minutes of Bloomberg TV every day, it’s free and an effortless way to get started. At the start many of the concepts may go over your head, that’s fine. However, in any given week there are only five or so big stories unfolding in the market, so you’ll see these repeated throughout the week with a different perspective each time. Not only will you get more familiar with a story each time you hear it, but you’ll also get a new nugget of information. This also ensures you see the full context of the story which you might not get with just a short summary. Best of all it’s not boring. The hosts have some personality and humour plus with all the flashing numbers and headlines around the screen, it is kind of cool too. There is almost no friction to get started, all you have to do is press play. I love this way of learning as you’re likely to be engaged than if you were trudging your way through a 1000 page book on pricing options.
Google Everything
Every time you hear a word or concept you don’t understand, Google it! Vol? P/E? Gamma? Google it! You will almost certainly see a link to an Investopedia article explaining the concept in the most digestible way possible and links to dozens of related topics. Most people are afraid of asking a dumb question, in the fear of being embarrassed or judged. The beautiful thing about Google is it doesn’t judge! So let your curiosity guide you and search every piece of financial jargon thrown at you without any hesitation (I still have to do this but don’t tell anyone). The other half of this process is exploring those related topics. This isn’t like school, where the teacher prescribes what you have to learn. Take control of your own learning by choosing to explore topics that you find interesting. As you go through each rabbit hole of discovering something new, you will start connecting pieces of information together and building a broader picture of what’s going on.
How it Works in Practise
Here’s an example of how I think this will work. I am posting this article in the first week of February, so if you start watching Bloomberg this week you’ll hear people talk about Non Farm Payrolls or NFPs all week. What they’re talking about is how the number of people employed in the US has changed over the last month, it’s one of the most important pieces of economic data. So let’s say you stumble upon this and then go through the rabbit hole of learning about unemployment, then you see how this connects to inflation, then how that might affect interest rates and the consequence it has on the stock market and so on. Hopefully, you can see how using this method, once concept can quickly lead you to learn so much more. If instead you become interested in the Gamestop situation and go down a path of learning about short-selling, hedge funds and options trading, fantastic. It doesn’t matter what topic you choose to explore, all that matters is that you are exploring and learning.
While I recommend Bloomberg here, it isn’t the be-all and end-all. If you find YouTube videos, podcasts or r/wallstreetbets works better for you then use that. Don’t think you only have to use traditional sources of information to learn about finance, there’s a wealth of information available on the internet and there is no syllabus you have to follow so just follow your own interests.
Do it!
The most important part of this is a) actually doing it and b) consistency. Do this every day for a month and I guarantee you’ll have a better understanding of what’s happening in our economy and financial markets than everyone else around you. For those in the early stages of their career who need to build up their commercial awareness this an easy way to start and if you stick with it you should stand out above and beyond your peers.
If you found this post helpful then please share it with a friend or family member, you’ll get one more person to talk to about stocks, forex or Bitcoin and I get some new readers, seems like a fair trade.