The stock market and the sphere of securities are areas that can help to make a good profit if the participant is well aware of all their features. However, without the relevant knowledge and reliable information on the nuances of buying and selling stocks, a newcomer can waste money. An opportunity to invest in securities is available to virtually everyone, but ignorance in this area is fraught with losses. The situation when the hairdresser strongly advises investing in media companies and follow the updates of the exchange market is ambiguous. Improper investing in shares can lead to the loss of financial resources, and an expert consultation can be more useful than the advice of a person who is not well-versed in this field.
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Peculiarities of Stocks and Investment
Theories of buying and selling securities, as well as the characteristics of the stock market, are described well in the book by Wheelan. The author compares the process of search and purchase of shares with an attempt “to pick the shortest checkout line at the grocery store” (Wheelan 162). In other words, the aspiration to earn significant capital as soon as possible cannot always be rational. Certainly, according to Wheelan’s example, the queue moves in different ways (162). Nevertheless, it does not mean that the buyer is fully insured against unforeseen situations. The desire to earn by purchasing shares and investments in securities has several consequences, and it is essential to consider them before spending money.
It is important to remember that any deal has two sides. As Wheelan notes, if one person wants to acquire stocks, the other strives to get rid of them (161). No one should rely on luck and follow what is in the trend today. Tips and advice from the hairdresser that buying “hot stocks” is a potentially profitable business can be justified. However, to ensure a profit, it is significant to be guided by what the market is and to be prepared for any consequences.
Potential Investment in Media Companies
A possibility to invest in media companies offers good prospects for those who are well aware of which corporations have a stable market position. The opinion of the hairdresser who is sure that this sector is potentially profitable may be logical. Nevertheless, this sphere is dynamic and, accordingly, risky. As Wheelan remarks, “no rational person will invest money somewhere when he or she can earn the same expected return with less risk somewhere else” (171).
This position means that an unreasonable opportunity of losing money should be taken into account, and before investing, careful consideration should be given to possible outcomes. Therefore, the hairdresser’s tips may be listened to, but it is wrong to believe blindly the words of the person who has nothing to do with the area of exchange trades and stocks.
Unreasonable investing in securities, including potentially profitable ones, can be fraught with the loss of money because of insufficient knowledge of how this market works. The hairdresser’s tips can be taken into consideration, but following the recommendations of the person who is not involved in this area is the wrong decision. All transactions and dealings are special and require an ability to foresee the possible outcome of this or that operation based on the situation in the financial market.
Wheelan, Charles. Naked Economics: Undressing the Dismal Science (Fully Revised and Updated). WW Norton & Company, 2010.
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