Market Musings: Let’s talk about the basics

Today, I’m bringing back another series I haven’t written about in six months.  Every Wednesday at 6am, I’ll be posting my weekly, Market Musings blog post.  For about seven years I worked as a performance and risk analyst for a local mutual fund company.  When I was in college, and early in my career, I was obsessed with the financial markets.  Then I took, and failed the CFA, and the Great Recession occurred.  Both events got me a little jaded about the stock market and the professionals that were supposed to know what was happening.  The one positive of the Great Recession is that it should have made people realize that almost nobody knows what’s really going to happen and that markets are not efficient.  That doesn’t mean it was worth it. It wasn’t.  The Great Recession was horrible, many people lost their jobs, and even more people don’t realize how close we were to a complete collapse of our financial markets.

Sadly, it will all happen again someday.  Why? People are arrogant and think they’re smarter than everyone else.  Plus the fact that there is money to be made and the people who figure out how to screw the rest of us tend to made huge profits without any form of punishment. It should be common sense but when you incentivize people to take risks, bad things tend to happen.

Now, I’m out of the mutual fund business but I still work for a company involved in the financial markets though my roles doesn’t require me to follow it’s movement.  Market Musings is my excuse to stay up to date on the markets.  Why? Because I miss it and I still enjoy them. It’s a different type of enjoyment. I’ve been through one of the worst financial collapses of the past fifty years. I will also always enjoy the fact that there is always something happening, or about the happen, and new to learn. It’s constantly evolving.  It’s still frustrating and much of the information, especially on TV, can leave regular people, people whose jobs don’t require them to follow the markets, and really even most of the professionals completely confused.

My last iteration of Market Musings was used as my way to complain about the financial markets.  I’m sure I’ll still do my fair share of complaining again.  In these new Market Musings posts, I hope to explain common financial terms to average people who’s day job doesn’t include  following the markets.  I’ll be writing about common terms like bid, ask, spread, or even weird events like Triple Witching Hour.

My goal is to answer some of the following questions:

  • Why are these terms important?
  • What do they mean?
  • Who uses this information or term?
  • When will you encounter them?
  • How did this term originate?

I want to write a series of posts on the financial markets, that isn’t a bunch of bull shit explanations that are meant to confuse you, that are meant for everyday people so know the terms the financial media throws around like there common sense. Hopefully, these posts will allow them to learn what to listen to and what to completely tune out. I tune out the majority of what I hear and I’ve given up watching financial television. I’ll talk about this more in a later post.

Come back next Wednesday to take a deeper dive into some of the common terms you’ll hear people use on TV,or in print, when they’re talking about the markets.  My hope is to make this fun and engaging without patronizing you. Plus, I hope we both learn something that helps us become better investors.