Trish Regan is one of America’s most recognized financial journalists and digital media hosts. An award-winning reporter, author, television personality, and speaker, Trish is a leading economic and political thought leader who helps viewers to better understand the most critical issues facing the economy and American business today. With extraordinary access to newsmakers and industry sources, as well as a knack for anticipating opportunities and risks in investing, Trish leverages her knowledge of how the mainstream media works to enable subscribers to best understand the information moving markets.
Trish is the Co-Founder and Executive Editor of 76research. She is also the founder, owner, and host of the daily livestreamed Trish Regan Show with more than 16 million views per month. Prior to founding 76research with longtime friend Rob Hordon, Trish anchored some of the most highly rated financial programs at America’s most noted financial networks including CNBC, Bloomberg, and most recently, Fox Business News.
Throughout her career, Trish has interviewed numerous heads of state, including multiple U.S. Presidents, foreign leaders, Fortune 500 CEOs and other institutional, charitable, and government leaders.
Trish credits her start in journalism to her fifth grade position as school correspondent for her local New Hampshire newspaper. But, while Trish showed an early interest in reporting and writing, it wasn’t until years later that she chose to make journalism her career. In fact, she originally intended to pursue a career in finance and worked as an analyst in emerging debt markets at Goldman Sachs while a student at Columbia University. Fluent in Spanish, Trish focused primarily on Latin American sovereign debt markets including Argentina, Mexico, Venezuela, and Brazil, but when Bloomberg Television offered her an opportunity to work as a correspondent, she made the jump into financial media.
Beginning at Bloomberg in 2000, Trish was on the front lines as the dot-com bubble burst. She covered its aftermath from Silicon Valley and San Francisco as a correspondent at MarketWatch before moving back to New York to work as a correspondent for CBS News. In 2006, Trish returned to her financial roots as an anchor on CNBC’s top-rated daily markets program The Call where she reported on the 2008 financial crisis in real time. While an anchor at CNBC, Trish also reported business news for NBC's Nightly News and The Today Show. In addition, she produced and hosted the two most highly rated documentaries in CNBC's history – Marijuana Inc and Marijuana USA, which investigated a massive and fast-developing underground industry. Trish predicted that industry would soon become mainstream in her book Joint Ventures: Inside America's Almost Legal Marijuana Industry, published by Wiley & Co. in 2010.
In 2011, Trish went back to Bloomberg Television to anchor the network's afternoon market close coverage as host of Street Smart with Trish Regan. While at Bloomberg, Trish was the network's main political anchor for all political television coverage of the 2012 election, including both the Republican and Democrat conventions and the election itself. From 2013 through 2016, Trish also worked as a front-page economic columnist for USA Today, writing on the biggest trends in business, markets and the economy.
In 2015, Trish left Bloomberg Television to join Fox News and Fox Business as the anchor of her new program The Intelligence Report with Trish Regan during FBN’s market hours. She would later move to an evening program and become the only woman in cable TV at that time to host a primetime show. Trish Regan Primetime grew 8pm ratings to a level never before seen at Fox Business.
While at Fox, Trish Regan also anchored two Republican Presidential debates – making history as part of the first all-woman team, with colleague Sandra Smith, to anchor a Presidential debate. She also appeared as an economic and markets contributor to all Fox News programming and was also a guest anchor on Cavuto, Fox and Friends, The Five, and primetime programming. In addition, Trish anchored all primetime coverage of the 2016 Democrat and Republican conventions for Fox Business and was a co-host alongside Neil Cavuto, Maria Bartiromo, Lou Dobbs and Stuart Varney for the network's main political events. Trish left Fox in 2020 and began work on the creation of her own digital media enterprise which debuted in August 2020. Her focus now is her own program and 76research, although she still appears regularly on other platforms both in cable news and in digital media.
Trish graduated with honors from Phillips Exeter Academy before going on to study opera at New England Conservatory and graduate cum laude with a degree in history from Columbia University. While at Exeter, Trish was the first-place winner of the Harvard Musical Association’s Competition for Excellence in Music, becoming the first singer to win the top prize since the organization was founded in 1837. She later studied opera and German at The American Institute for Musical Studies in Graz, Austria. Her operatic singing skills enabled her to represent her home state as Miss New Hampshire in The Miss America Pageant, where she won the talent competition and the first B. Wayne Award for the contestant with the most promise in the performing arts.
Trish's journalism awards have included multiple Emmy nominations for her documentary and investigative reporting. Trish was also recognized with a George Polk nomination for her long-form reporting covering the aftermath of Hurricane Katrina with a team from CNBC. While at MarketWatch in San Francisco, Trish was named SF’s Society for Professional Journalists most promising broadcast journalist.
Trish Regan was born and raised in New Hampshire. She now makes her home outside New York City with her husband and three young children.
A successful fund manager and stock picker, Rob Hordon has extensive experience investing across asset classes, sectors, geographies and strategies. With consistent emphasis on ways to preserve and grow assets and manage risk, Rob has offered guidance to thousands of financial advisors and wealth management professionals in the United States and abroad over the course of a multi-decade Wall Street career.
Rob’s professional investment career began in the late 1990s as an associate in the Equity Research department of Credit Suisse First Boston, where he covered wireless telecommunications stocks at the dawn of the mobile phone era. As a recent college graduate, Rob had a front row seat at one of the epicenters of the tech bubble. He witnessed for the first time the stock market’s potential to deliver immense value creation through innovation but also its characteristic tendency towards excess.
Rob went on to obtain his MBA from Columbia Business School, where he focused on security analysis and through his course work learned from some of the top investment practitioners in the country. Upon graduation from Columbia, he took an analyst role in the Risk Arbitrage department of a firm then called Arnhold and S. Bleichroeder Advisers, which would later be renamed First Eagle Investment Management.
For approximately seven years, Rob worked as a member of a small team that ran a hedge fund strategy focused on identifying mispriced long-short opportunities among companies involved in merger and acquisition activity. Just prior to the 2008 financial crisis, he transitioned over to First Eagle’s Global Value team under the auspices of the legendary international investor Jean-Marie Eveillard.
As an analyst on the team, Rob was responsible for initiating and covering several billion dollars of public equity investments across a wide range of industry sectors and countries. This move also reunited him with renowned Columbia Business School economist and author Bruce Greenwald, who had recently joined as Director of Research. As colleagues and mentors, Bruce and Jean-Marie would become the two most formative influences on Rob's investment career.
In 2011, Rob proposed and worked with the team to develop a new multi-asset investment strategy built around the same long-term value-oriented investment philosophy pioneered by Jean-Marie. As co-portfolio manager of the First Eagle Global Income Builder Fund, Rob was directly responsible for over a billion dollars of assets under management with a particular focus on dividend-paying stocks and credit instruments. Rob and his partner later re-created and managed this strategy at a London-based boutique investment firm, J O Hambro Capital Management, beginning in 2017.
In 2023, Rob teamed up with his longtime friend Trish Regan to form 76research, where he is Co-Founder and Chief Investment Strategist. This entrepreneurial venture merges his passion for investing, research and writing with his desire to help others benefit from the long-term wealth creation potential of the stock market.
The son of an economics professor and elementary school teacher, Rob is a proud husband and father of three whose interests include history, philosophy, sailing and world travel. He was born in New York City and grew up in northern New Jersey, where he attended local public schools.
Rob Hordon is a Chartered Financial Analyst. In addition to his MBA from Columbia Business School, he received his Bachelor’s degree in Politics from Princeton University and was awarded a Certificate in Political Theory. His senior thesis, entitled Justice without Truth: Contingency in American Moral Thought, explores how the philosophical tradition of American Pragmatism offers a roadmap out of the moral and political abyss of postmodern relativism.
One of the biggest hurdles facing anyone who wants to begin investing is language.
What do all these words actually mean?
We can relate.
As a college student, Trish was assigned to a temp job with Nomura Securities, one of the largest Japanese investment firms. Riding the elevator up on her first day, she thought it was a home alarm security company.
She later had an internship opportunity within a bank's fixed income department. Fixed income refers to bonds. She misunderstood at first and thought she was going to be working with retirees all day.
Rob was similarly confused as a young man starting out.
A prospectus is a specific type of document that an investment bank distributes when it arranges a stock or bond offering.
When Rob was interviewing for what became his first big job on Wall Street, he asked his future boss if he could see a prospectus.
All he actually wanted was to see some kind of brochure that explained what the company did. He thought that's what a prospectus was.
Impressed with his apparent familiarity with the intricacies of investment banking, his future boss took him to the trading floor to find a copy of a recently issued prospectus.
Rob got the job.
To be fair, sometimes in life, it is more important to seem like you know what you're talking about than to really know.
But when it comes to managing your own money, you really do need to know certain things.
You also have to worry about thinking you know how things work... when you actually don't!
This especially applies to the most basic concepts. Little misunderstandings can snowball and leave you not just confused but profoundly misguided.
Cutting though the confusion
We wrote this Beginner's Guide to Stocks to help novice investors, who are essentially starting from scratch on their investing journey, to get their bearings.
You want to go into this process with a strong foundation and a firm grasp of key ideas. Otherwise, you might just get frustrated, overwhelmed and give up.
The financial world has a lot of moving parts, so there is inevitably going to be a lot of ground to cover.
It also does not help that many people in the financial industry deliberately use confusing and obscure language.
From Wall Street to the financial media, it seems like everyone is trying to seem smarter than the next person.
We've witnessed this firsthand throughout our careers. The most insecure people tend to lean into jargon the most.
To some extent, the financial industry also benefits when its customers are in the dark. The less customers know, the less likely they are to ask difficult questions like, why are your fees so high?
One of the main goals of 76research is to help individuals empower themselves and improve their lives by developing a strong understanding of investing.
We encourage you to start the learning process with an attitude of patience and curiosity.
Let the ideas sink in. The very beginning is often the most important part of any learning experience.
The next step is for you, as an individual, to take control of your financial future.
Open an investment account if you don't already have one... and start taking advantage of the modern miracle that is free market capitalism!
We hear about stocks and the stock market all day long, but what actually are stocks?
When people talk about stocks, they are usually referring to the shares of public companies that trade on major exchanges like the New York Stock Exchange or the Nasdaq.
A public company is a business that at some point, perhaps in the distant past, sold all or part of its ownership to the general public, typically through a transaction known as an Initial Public Offering (IPO).
A privately owned company, like the neighborhood bakery, might have one or a few owners. A public company has its ownership shared by a very large number of owners.
A share of stock refers to the smallest ownership interest in a company that anyone can purchase. Anyone who owns at least one share of stock in a company is a shareholder or stockholder.
Stocks have ticker symbols that are like nicknames. These are unique codes (usually three, four or five letters) that make it easier to keep track of all the different stocks out there.
Market capitalization, or market cap, tells you the market value of all shares of a company.
To calculate market cap, you just have to multiply the total number of shares outstanding by the current share price.
Market cap represents the total market value of the equity of a company.
Equity just means ownership. Equity or equities are often used as synonyms for stock or stocks.
A real life example
Let's consider a very widely owned stock like Microsoft, which is one of the most valuable companies in the world.
Microsoft trades under the ticker symbol MSFT.
In November 2024, there were approximately 7.5 billion shares outstanding of MSFT. Shares were trading in the market at around $420 per share.
To calculate the market cap of Microsoft, one just has to multiply the price per share ($420) by the number of shares outstanding (7.5 billion).
Microsoft's market cap is therefore approximately $3.2 trillion.
Main takeaway
The key point to understand is that when you buy a share of a stock, you are buying a tiny ownership interest in a business and all the legally protected rights associated with that.
When it comes to any kind of purchase, there is always room for disagreement and debate over whether it makes sense.
A married couple, for example, may disagree, perhaps vociferously, as to whether a designer handbag purchased on sale was a bargain or a rip-off.
The same applies to stocks. Every investor has his or her own opinion about the future.
Unfortunately, one can never really know in advance if any investment will perform well.
The art and science of investing is all about figuring out the ones that will perform well and avoiding the ones that will not.
Valuation is the process of determining what is a fair price to pay for a stock. There are many different approaches.
Even like-minded investors can have major disagreements over methodology, assumptions and other considerations.
Some of the most vicious arguments among adults we have ever witnessed were on the subject of stock valuation. (Looking back, one has to wonder if these disagreements were ultimately just an excuse for cantankerous people to get into fights at the office).
Low price does not mean cheap.
One misconception that novice investors often have is that the share price has anything to do with whether or not a stock is cheap or expensive.
A $5 per share stock is not cheaper in any meaningful sense than a $500 per share stock.
Share price really has nothing to do with valuation but rather the number of shares outstanding. Twenty nickels are worth the same as ten dimes or one dollar.
When NVIDIA (NVDA) conducted its 10 to 1 stock split in June 2024, this could have been a positive signal or made the shares more accessible to the investing public.
The stock split did not, however, change the value of the company, just the supply of outstanding shares. The 10 to 1 stock split was the equivalent of trading in a dollar for ten dimes.
The reason someone should invest in stocks is basically the same reason one might start or invest in any business.
The main idea is that you are going to put a certain amount of cash upfront and, one way or another, get a lot more cash back in the future.
Businesses, when they are successful, are basically cash machines. They buy assets and hire people to do things, which results in a steady and perhaps growing stream of cash flow, perhaps for many years into the future.
Successful businesses can continue to generate cash for years, decades or even centuries. They become more valuable along the way, while perhaps paying regular dividends as well.
Sometimes, successful businesses get acquired by other businesses for much more than original investors paid.
In short, stocks are simply a way to participate in the success of a business... and without even doing any of the work.
Historical experience shows us that investing in stocks makes a lot of sense.
Let's start with the most heavily relied upon stock market index, the Standard & Poors 500 Index or S&P 500.
A stock market index is basically a statistical method of keeping track of the performance of a group of stocks. Indices can be sliced and diced in many different ways.
The S&P 500 generally tracks the 500 most valuable public companies in the U.S. and weights them within the index according to their market capitalization.
While there have been many periods of weak performance and even severe corrections, the S&P 500 has over time delivered excellent results for investors who have held it through the ups and downs.
As of November 30, 2024, the S&P 500 has delivered a compounded annualized total return of 16% over the prior 5 years, 13% over the prior 10 years, 11% over the prior 20 years, and 11% over the prior 30 years.
Put differently, a $10,000 investment in the S&P 500 would have grown to approximately $21,000 over 5 years, $34,000 over 10 years, $81,000 over 20 years, and $229,00 over 30 years.
Compounding is a critical concept in investing and explains how the sums can get so large over time when performance is strong. We explain in more detail below.
Inflation is another factor investors should think about when it comes to investing in stocks.
Unlike money parked in a bank account, for example, stocks have historically performed well as inflation hedges.
Business revenues and profits tend to grow in tandem with money printing and inflation.
Stocks provide participation in business ownership, which gives investors exposure to both real and inflation-driven growth in the economy.
Our Inflation Protection Model Portfolio focuses on stocks that we believe are especially likely to perform well in inflationary environments. We explain our thinking around the topic of inflation in our Investing for Inflation Protection guide.
One feature of stocks that is commonly known is that they sometimes pay dividends.
A dividend is a distribution to shareholders that is usually cash, but it can also consist of additional shares of stock.
If you are a shareholder, you automatically receive any dividends paid as a deposit into your account.
Dividends can be paid monthly, quarterly, annually or not at all. There can also be one-time dividends that are paid on no particular schedule, which are referred to as special dividends.
Dividend yield refers to the annualized dividend payment divided by the current share price.
The general idea is that dividend yield is the percentage cash return you can expect to receive from a stock, similar to the interest rate on a bank account.
Calculating total return
Dividends factor into the total return of a stock, which is how investors can track performance.
The other major variable is share price appreciation, which refers to how much the share price rises. If the share price falls, this is depreciation.
Total return is basically price appreciation/depreciation plus dividends (if any).
If you buy a share of stock for $100 per share and its price rises to $105 after you have already received a $3 per share dividend, the total return is $8 or 8%.
You made $5 through price appreciation, plus the $3 dividend, which equals $8.
To calculate total return in percentage terms, divide $8 by $100 (the price you paid), and you get 8%.
You can learn more about dividend investing in our Investing for Dividends guide, which explains the investment approach behind our Income Builder Model Portfolio.
We often hear about stocks reporting earnings results, or how they produce a certain level of earnings per share.
Earnings refer to the net profits that a company generates over a given period, such as a quarter or a full fiscal year.
Earnings per share (EPS) refers to total company profits divided by the number of shares.
Earnings are relevant to understanding the value of a share of stock.
A stock's Price/Earnings or P/E multiple (share price divided by earnings per share) is perhaps the most widely referenced valuation metric when it comes to stocks.
In a simple statistical sense, a stock with a relatively high P/E is considered expensive or richly valued, while a stock with a relatively low P/E is considered cheap or having a low valuation.
What really makes a stock expensive or cheap, however, is whether it trades above or below the P/E multiple that it deserves to have (based on growth, risk and other factors).
Growth stocks tend to have high P/E multiples because their earnings are expected to grow at a faster rate.
Value stocks generally have lower P/E multiples because the market is less optimistic about growth prospects.
Funds are pooled investment vehicles. Many investors contribute money into a single legal entity or account.
Like stocks, funds may have many shares or units. Different investors may own different amounts.
Investment funds are controlled by an asset manager.
Asset managers are organizations that direct how money they collect from outside investors is allocated.
In the case of stock funds, the asset manager typically assigns a portfolio manager (or team of portfolio managers) to make those decisions.
Asset managers can offer many different funds and usually charge investors fees based on the size of their investment in any particular fund.
Historically, the fund industry was dominated by mutual funds, but, in recent years, assets in Exchange Traded Funds (ETFs) have gained significant share.
The difference between mutual funds and ETFs is structural.
When an individual makes an investment in a mutual fund, he or she purchases newly created shares or units in the fund, which are typically priced at the close of business on the date of the purchase.
Mutual funds are valued every trading day using the closing market price of all the fund's holdings.
ETFs trade like stocks and are purchased during the trading day.
ETF market makers ensure that the purchase price always corresponds almost exactly to the underlying value of the holdings.
Active versus passive
A key initial consideration when choosing among mutual funds and ETFs is whether the investor wants a fund that is actively or passively managed.
An active fund is managed by a portfolio manager or team of portfolio managers who are trying to meet certain performance goals. Typically, this involves beating a certain index (like the S&P 500, in the case of a U.S. large cap stock fund).
Active managers can have other investment objectives, however, like generating income.
Passive funds simply try to replicate the performance of a particular index in a very low cost, efficient way.
Managers of passive portfolios are not trying to figure out which stocks within the index will perform the best. Rather, they are just maintaining an allocation to all of them in line with the composition of the index.
It may seem odd to not even try to perform better than other investors.
The reason passive strategies are popular is that it is in fact extremely difficult to deliver better than average results over long periods of time. Active strategies charge higher fees, which more often than not are not justified by results.
Mutual funds were historically actively managed, but assets in mutual funds have become increasingly oriented towards passive strategies in recent years and decades.
ETFs were originally developed for passive strategies but in recent years are starting to be used by active managers. Most of the money in ETFs remains passive, however.
You can read more about our thoughts on active versus passive funds (and many other topics) in our Guide to Independent Investing.
Another way to get exposure to stocks is to buy shares directly through a brokerage account.
A brokerage account is like a bank account that gives you the ability to purchase stocks, funds and other investments. All of these different investments are then held within the account, where you can keep track of their performance.
Rather than paying an asset manager fees to buy and holds stocks for you, an individual can purchase stocks directly within their own accounts.
Direct stock ownership provides individuals with more control over their investments and the opportunity to take advantage of specific opportunities.
Many investors blend a base of exposure to diversified funds (passive and/or active) with a selection of individual stocks.
Our Model Portfolios are intended as a resource for individuals who are interested in building up a portfolio of individual stocks.
Stocks have historically generated strong returns relative to other types of investments, such as bonds, bank accounts or Certificates of Deposit.
Stocks tend to have higher volatility, however.
Volatility is a statistical measurement that refers to the tendency of the price of a stock or a stock index to fluctuate. The more a stock is likely to go up or down a lot, the more volatile it is.
Investors in the stock market can reasonably expect good long-term outcomes, but the journey can be quite rocky.
Given the risk of short-term fluctuations, investors in the stock market are generally using funds that will not have to be accessed for many years.
Beyond volatility, there are no guarantees that an investment in a particular stock, or even an index, will deliver good results, even over long time frames.
There is even the possibility of total and permanent capital loss, which is of course much more likely when it comes to individual stocks. Businesses do fail from time to time.
Diversification is a risk management strategy used to minimize both volatility and the risk of capital loss.
One can achieve diversification by owning diversified funds or a portfolio of many different stocks.
By owning a variety of stocks, an investor reduces the potential harm a single bad investment can have on the total portfolio.
The risk of capital loss can also be addressed by exercising a high degree of caution around businesses you invest in and putting emphasis on business quality.
We explain the approach to business quality that we apply to our growth-oriented American Resilience Model Portfolio in our Investing for Resilience guide.
Volatility and capital loss are among the key risks that stock market investors need to understand.
There are, however, risks associated with not being invested in higher returning asset classes like stocks.
Low risk investments like bonds and bank accounts generate returns that often, at best, only slightly exceed inflation rates.
Worse yet, investors typically have to pay taxes at ordinary rates on earned interest that comes from bonds and bank accounts. This can substantially reduce after-tax returns.
Sometimes, returns generated by bonds and bank accounts are below inflation rates.
This means the real value of one's savings is declining over time even if the investment performs exactly as intended.
The power of compounding
Compounding is the mathematical idea of continuously earning returns on investment gains.
Like a snowball getting bigger and bigger as it rolls down hill, the compounding process can turn small numbers into very large ones given enough time.
Compounding at a 10% annual rate of return, for example, an investor can turn $100 into $110 after one year, $121 after two years, and $133 after three years. After 20 years, $100 grows to $673.
Investors saving for long-term objectives, like retirement, often can look forward to many years, if not decades, of compounding.
Missing out on relatively high potential returns because of a desire to avoid losses or volatility can be quite damaging.
An individual who invests $10,000 in "low risk" investments that deliver 3% average annualized returns would end up with approximately $18,000 after 20 years.
Compounded at an 8% annualized return, the future value of the portfolio after 20 years would be almost $47,000.
The 5% difference in average return translated into an investment gain that was more than 4.6 times larger ($37,000 divided by $8,000).
Compounding is the key to investment success.
Albert Einstein even allegedly described compound interest as the 8th wonder of the world.
Investors, especially those with long time horizons, must consider the opportunity cost of their decisions.
Opportunity cost refers to the loss of potential gain when an alternative option is not selected.
Investors should therefore view low rates of return as a true risk factor in terms of achieving their financial goals.
Because stocks have the potential to compound at high rates of return, they are widely used by investors with relatively long time horizons.
In the U.S., investors with assets in taxable accounts need to be aware of taxes on interest, dividends and realized capital gains (net profits from the sale of an investment).
Investors in retirement accounts, such as 401k accounts or Individual Retirement Accounts (IRAs) or other tax-sheltered accounts (like college 529 accounts), generally do not need to be concerned with interest, dividends and capital gains.
Interest received from bonds and bank accounts is often treated as ordinary income, along with any short-term capital gains that are realized. For tax purposes, short-term rates apply to investments held for less than one year.
Dividends and long-term capital gains (held for at least one year) often receive more favorable tax treatment and are taxed at lower rates.
To defer and minimize capital gains taxes, many investors in stocks deliberately seek long-term investment opportunities.
A long-term investment approach offers many other benefits as well.
Subscribers to the 76report have access to Taking Control of Your Capital Gains in which we address many key topics related to taxes and investing in stocks.
Investors have many options to get started in the stock market.
There are numerous online brokerage firms, many if not most of which offer stock trading as well as the opportunity to purchase funds with no or low commissions.
The largest brokerage firms are a good starting point to research your options.
One variable investors may wish to consider is the access that a particular brokerage firm offers to proprietary funds, including index funds.
Often, if you have a brokerage account with a particular institution, you can access these funds at lower cost than you might otherwise be able to do.
We encourage novice investors to research the major brokerage firms, investigate their websites and work with their client service representatives, who tend to be fairly knowledgeable, to set up accounts.
Employed individuals may also have the opportunity to invest through company sponsored retirement plans, such as 401k plans.
These plans typically provide a compelling opportunity to invest using pre-tax earnings.
We highly encourage all working individuals to explore these opportunities and consider investing through them to the maximum allowable limits.
Company sponsored retirement plans often do not permit individual stock purchases but provide access to stock mutual funds, typically including low cost index funds.
After a worker moves on from a particular employer, he or she can often rollover a 401k account into an Individual Retirement Account (IRA), which preserves the tax advantages of the account.
An IRA is similar to a standard brokerage account in terms of being able to access a broad range of investment options.
Single stocks can typically be purchased within IRA accounts. Depending on the circumstances, individual investors may be able to set up tax-advantaged IRA accounts directly.
Brokerage firms can assist clients in assessing their eligibility for the different types of IRAs and navigating the rules and limitations.
We recognize the vocabulary and concepts around investing can be intimidating.
We also recognize that setting up accounts can be tedious.
We also know that no one wants to experience losses with their hard earned money.
Our message to new investors is that it is really not as complicated or time consuming as it may appear on the surface. Accounts can generally be set up and funded entirely online.
If you prefer direct human interaction, many of the brokerage firms, including banks with brokerage operations, have physical offices. You can get as much handholding as you require, including even fee-based financial advice.
Mathematically, there are only two ways to achieve financial success.
First, you must save money. No matter how much you may earn, you will have nothing unless you find a way to save a portion of your income.
Second, you must invest your money effectively.
Like your physical health, your career and your personal relationships, the only person responsible for your financial well-being is you.
Take the time to understand the basics, then get started.
Choose a reputable brokerage firm that you are comfortable working with. Open and fund an account.
Start slow and invest gradually. Perhaps begin with an index fund, such as one that tracks the S&P 500, and/or some high quality stocks that you have researched.
Monitor your account and review your financial statements. Read about your investments.
Investing is a constant learning process.
Just like your money, your understanding will compound over time as well!
There is a tendency among novice investors to gravitate to the hottest stocks they hear about on television or among their friends.
Taking risk can be exciting, and the allure of "getting rich quick" is hard to resist.
Speculative growth stories usually attract the most attention but are often extremely volatile and can have the greatest downside risk potential.
While aggressive growth stocks have a role to play within a portfolio, investors new to the stock market should take a broad view of the opportunity set.
Spend time looking at established businesses across sectors that offer relative stability and the potential for solid long-term returns.
We encourage new investors to approach the stock market not as a form of entertainment but as a way to accrue meaningful long-term wealth.
Investing in stocks can be fun and rewarding but should be approached in a sensible and thoughtful way.
Our research offerings are intended for individuals who are serious about pursuing their long-term financial goals and are looking for information and insights that will help to achieve them.
Click HERE to learn more about a starting a subscription to the 76report for as low as $1 per month.
The 76report is our flagship newsletter and offers investors, from beginners to professionals, a wide range of investment-related content, including selections from our Model Portfolio research.
Click HERE to learn more about our Model Portfolio subscription options.
Our Model Portfolios serve as a resource for individuals looking to leverage our in-depth research and decades of collective experience as they build and manage their own investment portfolios.
Active funds: Funds in which the portfolio managers exercise their own judgement as they pursue the fund's investment goals (opposite of passive funds).
Asset manager: An organization that manages investment funds.
Board of directors: The individuals elected by a company's shareholders who oversee the management of the company.
Broker: A company, also called a brokerage firm, that provides a platform for investors to set up accounts and trade and hold stocks and funds.
Brokerage account: An account set up at a brokerage firm that holds an individual's various investments in stocks, funds and other securities. Investors can place trades within these accounts.
Capital gains/losses: Increases/decreases in an investor's position in a stock or fund relative to the price originally paid. Realized gains/losses represent gains/losses after an investment has been sold, while unrealized gains are theoretical based on trading prices.
Cash flow: A measure of the actual cash received or released by a company in the course of doing business. Free cash flow is a useful financial metric that captures all sources and uses of cash by a company over a certain time frame. Cash flow differs from earnings, which involve more accounting assumptions and adjustments.
Compounding: The mathematical process of generating investment returns upon investment returns, which leads to exponential growth.
Concentration: When an investment portfolio is heavily exposed to a particular stock or type of investment. The opposite of diversification.
Diversification: A risk management strategy used by investors to reduce volatility and potential capital loss by owning a wide range of investments that are likely to perform differently. The opposite of concentration.
Dividend: A distribution (typically cash, but sometimes stock) declared and paid by a company to its shareholders.
Dividend yield: Annual dividend divided by share price.
Dow Jones Index: A stock market index that measures the Dow Jones Industrial Average, which adds together the share prices of 30 specific stocks. The Dow is mentioned often in the financial media because of its historical significance but is less relevant within the investment industry because of its somewhat arbitrary methodology.
Earnings: The net profits of a business, typically reported on a quarterly basis.
Earnings per share (EPS): Company earnings divided by the total number of shares outstanding.
EBIT/EBITDA: Earnings Before Interest and Taxes/Earnings Before Interest, Taxes, Depreciation and Amortization. Alternative metrics to measure business profitability.
Enterprise value: The total value of the operations of a business, which is calculated by adding market capitalization, net debt and other claims to the business, like minority interests.
Equity: A synonym for stock, as in the equity market (stock market) or equities (stocks).
Exchange Traded Fund (ETF): A type of investment fund, typically passive, that trades much like a share of stock and can be purchased or sold continuously over the course of a trading day. Two of the largest ETFs are SPY (S&P 500) and QQQ (Nasdaq 100).
Growth stocks: Stocks representing businesses that are expected to grow at above average rates.
Hedge fund: An alternative investment fund that deploys a wide range of strategies and can typically only be accessed through private channels.
Index: A statistical tool to keep track of the performance of a group of stocks or other assets. Market capitalization weighted indices set the components of the index on the basis of their relative valuations.
Initial Public Offering (IPO): A transaction process that represents the first time a company sells shares to the general public.
Large-cap stocks: Stocks with a high market capitalization (typically understood as $10 billion or greater).
Long-term gains: Realized or unrealized capital gains based on investments that have been held for at least 12 months.
Management: The individuals hired by the board of directors to run the company on a day to day basis.
Margin debt: Money lent to brokerage account holders using their account holdings as collateral.
Market capitalization: The total value of the stock of a company (shares outstanding times share price).
Mid-cap stocks: Stocks with a mid-sized market capitalization (typically understood as between $2 billion and $10 billion).
Mutual fund: A type of investment fund that can be actively or passively managed in which investors are typically able to purchase or redeem their shares once per trading day.
Nasdaq Composite Index: A market capitalization weighted stock market index that tracks the stocks traded on the Nasdaq Stock Exchange. The index is heavily weighted toward technology-related growth stocks and is often viewed as a proxy for tech.
Opportunity cost: The loss of potential gain from pursuing another investment option that may deliver higher returns.
Passive funds: Funds that are managed to replicate the performance of a reference index (opposite of active funds).
Portfolio: A collection of different investments.
Portfolio manager: An individual employed by an asset manager who has decision-making authority over a fund.
Price/earnings (P/E) multiple: Perhaps the most well-known valuation metric, which is calculated by dividing price per share by earnings per share (EPS).
Retirement accounts: Investment accounts such as 401k accounts or Individual Retirement Accounts (IRAs) that offer special tax benefits.
Rollover: The process of transferring funds from one brokerage or retirement account to another.
S&P 500 Index: A widely used market capitalization weighted stock index that generally consists of the 500 most valuable public companies in the United States.
Sector: A group of stocks that are classified as belonging to a certain industry.
Security: A tradable financial asset, like a share of stock.
Share: The smallest unit of ownership of a stock.
Share buyback: When a company goes into the market and buys, and then usually retires, its own shares (same as share repurchase).
Share price: The price at which a share of stock has traded as of a certain time and date.
Share repurchase: When a company goes into the market and buys, and then usually retires, its own shares (same as share buyback).
Shareholder: An individual or entity that owns shares of a stock (same as stockholder).
Shares outstanding: The total number of shares that have been issued and are owned by all shareholders.
Short-term gains: Realized or unrealized capital gains based on investments that have been held for less than 12 months.
Small-cap stocks: Stocks with a low market capitalization (typically understood as below $2 billion).
Special dividend: A one-time dividend payment declared by a company's board of directors.
Stock: Ownership interest in a business.
Stock split: When one share of stock is divided into a larger number of shares, and the new shares are then distributed to shareholders.
Stockholder: An individual or entity that owns shares of a stock (same as shareholder).
Taxable accounts: Brokerage accounts that do not benefit from special tax-sheltered status (such as retirement accounts).
Ticker: The typically 3, 4 or 5 symbol code used to place trades within brokerage accounts.
Total return: Price appreciation/depreciation of a stock or fund plus dividends, which are typically assumed to be reinvested in the shares on the date of payment. Total return is often expressed as a percentage of the initial share price in the period in which it is being measured.
Trade: The act of buying or selling a stock, fund or other security on an exchange.
Trader: Any person who actively trades securities. A professional trader does so for a living, often on behalf of clients.
Valuation: The appraised or implied value of a stock, asset or collection of assets, or the process of estimating value.
Value stocks: Stocks that trade at relatively low valuation multiples or are considered worth more than their trading levels suggest.
Volatility: A statistical measurement of the degree to which a stock, index or any asset fluctuates up or down.