81

Fundamentally, I think there's a high level (and perhaps unsatisfying) answer to this. It's because that's not "banking" as a business, and a bank is established to do banking, not to get into the stock market. In other words, this question strikes me about the same as asking, why don't ice cream shops stop selling ice cream, and instead get in the ...


75

No, you've misinterpreted it. When the stock drops to $5, your 10 shares are now worth $50. You have lost $50. The $20 profit you had on the previous day was a potential profit (called paper profit, or unrealized gain), based on selling at the $12 price, and you didn't take that offer. If you had sold at $12, and kept the $120 as cash (ignoring commissions ...


25

It's not pretending to be bulletproof advice. You'll certainly lose money some of the time. That's just how it is in the stock market. "Don't try to time the market" is advice that an average Joe can't possibly consistently know how the market will do and always make the right decision. If you buy consistently, sometimes you will be buying high and sometimes ...


12

Because your "bank" will fail The related questions assumes a "buy low, sell high", or even better, a "buy low, never sell" scheme of investment. But your proposed geared fund will not have that. They will have clients. Clients that can withdraw at worst possible moment. Recessions come hand to hand with markets down run. Long recessions will cause ...


10

You're trying to "time the market" which has proven to be a losing strategy in the long run. In your scenraio, if you could sell partial shares (i.e. 1.67 to extract the $20 profit), then wait for the drop to $5 to buy 4 more, you'd have 12.33 shares. The problem is that those shares are now worth $5 each for a total of $61.67, so you still have an overall ...


5

An important point that is easy to miss: the chart you're showing appears to be a price index, this excludes dividends that were paid out over time. Look at the Nikkei-225 total return index (N225TR) to see the actual returns you would have made just by being in the market. In the long term timing really isn't that important.


3

You need to start the process of becoming financially literate. Start by reading beginner level introductory material. There are a lot of "XYZ For Dummies" books. Build a basic foundation and as you understand more, seek out more complex books in areas of the market that interest you. Understanding financial markets is like learning a foreign language. It ...


3

Compounding of an investment in a stock is not something that happens directly. If you put money in an interest bearing account (such as a savings account, money market account, etc.) then each compounding period you are going to earn interest which is then credited to your account. Then in the next period you are going to earn interest not only on your ...


3

That same stock price the next day goes to $12.00 dollars per share. You've made $20 dollar profit On paper you have a profit. But you have to sell the shares to get the actual profit. If the stock drops the next day to $5 dollars, withdraw your profit of $20 dollars and then use buy back into that same stock at now $5 dollars a share. If you didn'...


3

Why doesn't any (serious) bank offer a savings account with a fixed 2% interest rate for an unlimited amount of time? I don't want to assume your age but you may not remember that this was actually a completely real situation in the past. When I was a growing up in the 80's I recall my basic savings account had an annual interest rate of somewhere between ...


3

With foreign indexes, you need to also take account the exchange rate between the currency the index is rated in and whatever currency you yourself use. For Nikkei 225 that currency is JPY. I'm using USD as the local currency, as EUR didn't exist back in 1990. Exchange rate in 1990 was 1 USD = 140 JPY. If you put 1000 USD into Nikkei 225 in 1990, it would ...


2

An attempt to time-the-market should probably be a systematic method rather than the emotion of an individual. For instance the use of Bollinger Bands could be a systematic method. Or response to news and economic reports could be a systematic method. Or an attempt to time-the-market should be based on reaching a financial goal such as a certain percentage ...


1

Banks have to have enough assets to cover the value of savers’ deposits at all times. Just relying on having enough cash on hand to cover withdrawals is what Ponzi schemes and fraudsters do. (Note that the assets don’t have to be liquid, so banks can still run into trouble when they can’t call in the long-term loans they have made to cover a sudden rush of ...


1

Why doesn't any (serious) bank offer a savings account with a fixed 2% interest rate for an unlimited amount of time? If they did that, I would do this: Divide my money 50-50 between the bank account and stocks Balance yearly. That way I would end up taking money from the bank account whenever stocks are low, and put money there whenever stocks are high. ...


1

Dividend Growth Compounding Versus Interest Compounding by KenFaulkenberry Interest compounding is a powerful financial concept, but dividend growth compounding multiplies the benefits of exponential growth. Compounding occurs when interest or dividends are reinvested and added to what is already there. Compound growth is geometric or ...


1

Normal OHLC quotes refer to trade prices, not bids or asks. As you note in a comment, the volume listed also reflects actual trades. True, each trade typically occurs at either the current bid or the current ask, but there are also bids and asks that do not result in trades. The less liquid the stock, the greater the possible range of bids and asks that are ...


1

This is pretty good, and depending upon your age and risk tolerance, this could work for the rest of your life. I do not think you need to add ETFs, mutual funds are fine for your purchases. However here is my opinion which can be discarded if your risk tolerance will not let you sleep safe at night. This would apply if you are under the age of 60. For ...


1

Here’s a brief background about me before I answer your question. I am an equity analyst at a boutique asset management firm which uses a bottom up investment approach. We are generally focused on the underlying fundamentals of a business and less concerned with timing the market from an economics perspective. My job is to analyze the financial statements of ...


1

The term can mean different things in different contexts, even within taxes. The example you reference with the university is in the context of determine non-profit status i.e. if the business is not related to the mission of the university it doesn't necessarily qualify for tax-exempt status. In the context of IRAs, it typically has to do with the ...


1

It is usually better to put after-tax money in a Roth IRA over putting it into a regular account or in a Traditional IRA, or, if you cannot put the after-tax money directly into a Roth, put it into a traditional IRA and then quickly convert it to a Roth (a "back-door" Roth). The rest of this answer assumes that you put after-tax money into a traditional IRA ...


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