Stock Market Success | A Master Guide for Beginners | | Business Snippets | Skillshare

Stock Market Success | A Master Guide for Beginners |

Business Snippets, Leave Smarter

Stock Market Success | A Master Guide for Beginners |

Business Snippets, Leave Smarter

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5 Lessons (38m)
    • 1. WHY YOU NEED THIS

      2:36
    • 2. Meet the Key Players: DOW, S&P 500, and NASDAQ.

      12:27
    • 3. Meet the Sectors: Components of the Stock Market.

      9:08
    • 4. Meet the Economy & Why is it so Important.

      11:16
    • 5. Meet YOUR NEW STEPS!

      2:48
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About This Class

  • I've decided that this class will remain free.  Please learn and enjoy.  Invite others.  Thanks!

Just because you're in the creative or non-financial space does not mean that you don't need to know about the nuances of the stock market, the economy, and how those interact with your own personal finances.

The Economy:  The Stock Market:  Your Wallet

A Logical and Practical way of Thinking!

  • Thinking about investing or just learning? How about, do both! It doesn't have to be hard.
  • I intend to teach and share with you actionable content that will empower you and provide you with a solid foundation upon which you can build and grow your knowledge and future goals

By the end of the course, you'll have a new and logically practical approach to understanding the stock market and the economy.

  1. learn and easily utilize the common vocabulary and concepts of the Stock Market;
  2. be comfortable in looking at the Stock Market from a practical point of view;
  3. you'll know why the Indices are important; and more!
  4. you'll know why the DOW, S&P 500 keep showing up in your news;
  5. you'll know how to think about the Stock Market smartly.

Through these classes, you will start thinking about your money and long term investments the same way you view your craft: it takes practice, patience, and skill to excel.  Money is the same.

I hope you enjoy this journey!

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Business Snippets

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Teacher

There is no reason for you to not know about the nuances of the stock market, the economy, and how those interact with your own personal finances.  Don't let the subject matter scare you!

My classes are created so that all financial information discussed is relevant to you on a personal level. And, I'm going to make sure that it’s simple & understandable. We're here to remove the mystery. Let's learn together!

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Transcripts

1. WHY YOU NEED THIS: to Let's begin with the why Why should I care about all of this? Why do you even care? Because you're not even invested in the stock market. $300 billion. What is that number? $300 billion is the daily trading volume on just three of the top U. S. Stock exchange. So that's 300 billion from three different stocks. Next comes $25 trillion. What is that number? $25 trillion is the combined value of all the companies that are traded in the S and P 500 . That's $25 trillion. Folks, do you really need to understand that these dollar amounts that are out there, these are huge these air, not trivial dollar amounts. And for us to pretend for you and I for us to pretend that these numbers don't mean anything is actually a fallacy what it is, it puts us in a bad position because we are now literally refusing toe understand why these large dollar amounts are out there. And second, we're trying to pretend that these numbers don't impact us. It's all wrong, and we need to change that right away. So to understand, all of this better. We've got to kind of understand this stuff market and its fundamentals Now, yes, the stock market is hard. The stock market can be confusing place to be, but its OK, we're here to learn. We're here to learn together, and we're gonna get through this. So let's pick up these pieces that are kind of scattered about. Let's combine them into something that makes sense to us, and then we can frankly ask ourselves, Hey, I now understand this thing. How can it benefit me? How can it impact my bottom line? How can it impact my wallet for the positive? And that's why you need to study this and that's why you're enrolled in this course now, as we go through the course is we're gonna find that some of these materials require further study or more if a deeper dive. And to fix that, what I'm going to be doing is creating war courses where we can have a further deep dive in these particular topics. But for what we're doing here today, what I'm going to present in these lectures is sufficient for you to get a good understanding with stuff. Market and a good understanding of what I would call foundational beginnings for you to understand and say This makes sense to me. Let me see if I want to learn. That's what I want to accomplish with. And by the time this class is over, you're going to have finished this project that I constructed. We're going to be building this project, basically lecture by lecture. And by the time this project is over, you're going to have something that you carry in your phone. They can print it out if you wish, and it's a wonderful map. It's a wonderful way for you to think about the stock market. Think about economic data. So enough of this. Let's get into lecture three and let's get started. We're gonna talk about indices. 2. Meet the Key Players: DOW, S&P 500, and NASDAQ. : All right. Welcome to lecture three. Here we begin talking about the various indices the Dow Jones industrial average, the S and P 500 NASDAQ. I'm going to tell you why they're important, especially why they're important to you and why you should care about them on a day to day basis. So before you start investing before you start trading, it's kind of important. In fact, it's very important for you to understand how the market is structured. Otherwise, what ends up happening is you go kaput. You lose your money because you don't know where things are. You end up buying a few things that you really didn't need or you end up buying a few things that you don't understand. And then you get frustrated and then guess what? Now you're done with trading. Now you call stop trading gambling and it's all those negative iterations that come from it . We've got to stop that. Let's understand the structure so you could do better. So let's understand how the various indices are organized. Let's see which stocks belong Where and let's try to figure out why do they keep telling you where the Dow closed for the day. Why do you care for this particular number? So first, the Dow Jones industrial average and I'm just gonna shorten it and call it the Dow Jones. From now one, Dow Jones is an index, and what the index does, it measures a segment off the stock population. It measures a segment of the stock market. Think of a segment as a portion, a small part of the market. So let's build on that a little bit. So it's very difficult for us to track all the different types of companies that trade on this year's stock exchanges. In fact, it's very difficult for another reason. It's very difficult because companies are in different industries, comparing Netflix to Amazon or comparing Tesla's to Volkswagon mix ends. But comparing Netflix to three M or Netflix to Caterpillar doesn't kind of make sense. Yet these companies exist, So how do you make sense of it? A index allows you to categorise these companies any much easier way. More importantly, these portions, these segments allow you to measure the stock market on a much more equal footing. Let me give you a few examples. Think of it like taking the pulse of human being. You go to the doctor. The doctor takes your pulse. She says, Hey, you have a high pulse. You may have a fever. She may ask you why do you have a high pulse? And you may say, Hey, I just ran half a marathon. You may have a high pulse because you perhaps are anxious. So it goes on and on. The pulse itself doesn't tell the doctor if you're any good or bad position. What the pulse tells the doctor with the pulse tells a physician is that, Hey, I have somewhat off a starting point to begin my investigation, and that's exactly what these indices allow us to do. It gives us a starting point to begin an investigation in the stock market. Now the reason why you always hear about the Dow Jones and why it closed up so many points or closed down so many points is because the Dow Jones industrial average is comprised of the top 30 stocks in the U. S. Exchanges. And because these companies were so huge they have what's called a global footprint. They do business all over the world. These companies do business in Asia and Africa and Europe. So by measuring these companies and understanding that if they've gone up or down, what does that tell you? It gives you a understanding. It gives you a better grasp off how the U. S economy is performing. It gives you better understanding of how all the various companies within that index are performing within the Dow Jones industrial average. You're going to find stocks such as Exxon. You're going to find Intel, Goldman Sachs, travelers, General Electric, Bank of America and on and on. So these are the largest companies in the United States exchanges. So having said that, who do you think deserves a higher priority? Some company that has a global footprint or your local mom and pop shop that may have customers in two different counties? Of course, it's going to be the larger company, and that's why the Dow Jones industrial averages. The Dow Jones index is a critical index for us to know about, because this index is comprised of the largest companies and the index's performance tells us how good or bad those companies within that index are doing. So the next time you hear that, the Dow Jones went up 100 points or went up about half a percent withdrew. Going to stake yourself is interesting. If the Dow Jones went up half a percent, if the Dow Jones went up about 150 points or so, what that means is the bulk of the company's within that index today get well, and the index is comprised of the 30 largest companies. So that further tells me that these large companies had a good day. Therefore, things are looking OK in the economy as a whole. Of course, we're speaking generally, so these are tactics that you're going to learn to start thinking about the market and these air skills that you're going to build. They're certainly going to be more finesse points, and those will come in our later deep dive lectures. So by following the Dow, this is what you get. You get a very good grass. Be very good understanding you get the polls off the top 30 companies, essentially in the world. What comes next? This is what comes next. And this is why I want you to start thinking these companies sell stuff I and other customers across the globe by these things. Therefore, if these companies air continued to do well, that means that we as customers are buying their stuff. And as long as we keep buying their stuff, and as long as these companies have higher profit margins, what happens? Their stock prices keep going up, and generally the stock market keeps going up. So just by looking at the index and seeing how much it's moved from a certain time period, say from a year ago where two years ago it gives you a very good grasp, a very good understanding back to their word again, it gives you a pulse off the health of the U. S. Economy. So Dow Jones going up is kind of a good thing. And Dow Jones going down is kind of a bad thing. So our first exercise in our project is going to be You're going to start tracking the Dow Jones average, and I'm gonna ask you to do that for about a period of 30 days. So for the class project, But you're going to do, they're going to start tracking the Dow Jones industrial average, and I would like you to do it At least for 30 days. I've got a sheet below. You're gonna fill in the blanks and follow through. We're going to be adding more things to it. So let's go on to the next index. The other big boy in the room is the S and P 500. Interesting. There's a 500 behind it. Yes, the S and P 500 tracks the 500 ish there few variations that tracks the top 500 companies in the U. S. Exchanges. Now, because it's tracking 500 companies, it's called a broad index. And that kind of makes sense. Who gives you a better picture of overall help? It Company A index that tracks only the top 30 stocks or index that tracks the 500 top companies Well, the answer, of course, is that both of them do. But the S and P 500 is a little bit more precise because it has more exposure. It's measuring Mawr companies a key difference between the S and P 500 the Dow Jones average. The Dow Jones Industrial Average index is the following The Dow Jones is called a price weighted index. I'll get to that and the S and P 500 is a market weighted index. But that basically means is within the Dow Jones, those top 30 companies. Whatever company has the highest share price affects that index the most in the S and P 500 . They look at it from another angle. They look at it as the most valuable company, and that's a company with the highest market capitalization. That company causes the greatest impact to the index. The market capitalization is nothing more than the current value off the company. And you get that number by multiplying the current share price by the total shares outstanding. And guess what? These days you don't even have to do that because every stock quote will have the market capitalization listed for you. And that's something you're going to be tracking as well. So to give you a little bit of a flavor off the companies within the S and P 500 we've got MGM, MGM Resorts. We've got Met life. We've got Microsoft. We've got Bank of America, Nielsen Holdings, those guys who measure your TV and Internet usage north of Groman. We've got the aerospace and defense contractor, and on and on. Basically, all these big companies that impact you on a daily basis generally belong within the S and P 500. So here's another nuance. The things that you buy on daily basis affect these companies and their profits on a daily basis. So having these data points in mind, let's throw away this fallacy off. The stock market has no impact on us, and I have no impact on the stock market. That's completely wrong. We are completely connected. Those trillions of dollars are all connected, and you are an integral part of that equation. In lecture number four, we're going to actually cover the S and P 500 libit more detailed because as we talked about an index measuring a portion of the market, a segment of the market, the segment of the market is further broken down in sectors. What sectors do is allows us to put like companies in the same category been that allows us to compare apples to apples and oranges to oranges. You wouldn't want to compare General Motors to Amazon. Yes, they're both large companies, but they're entirely two different industries. So comparing them on the day to day basis doesn't make a lot of sense. Would you compare, say, Netflix to north of Grauman. One company streams programming for us and in the evening and the other makes missiles to blow up things. These companies are not related yet they are large enough that the impact our economy. So sectors allow us to places companies in different categories and different groups. And we're going to be covering that in lecture for the last Index I want to talk about right now is the NASDAQ. The NASDAQ 100 does Guess what it covers. The top 100 tech companies were all about Tech these days, so it makes a lot of sense that we have an index that measures the performance off technology companies again. We want to be able to measure segments of the stock market, and we want to be able to measure categories within stock market. So just based on the fact that NASDAQ tracks the technology sector, what companies do you think belong in their Netflix, Amazon, Cisco apple and on and on again? These large companies that you interact with the daily basis belong in the NASDAQ 100. So what does that do this. What it does for you. This is an exercise I want you to start doing. Next time you hear that the Dow Jones was up a certain percentage point, or the S and P 500 was up a certain percentage or the NASDAQ was down a certain percentage points. Instead, if you just taking in that number and throwing it away, I want you to again have that conversation with yourself in say, Okay, if NASDAQ did good today, that generally means that tech companies did good today. If tech companies air doing good today, that means that the economy is also doing good. Why is that? Because you buy tech, I buy tech those people around you, they all by tech. So if we're buying technology stuff, these companies are going to continue doing well. Now again, back to a little bit of a caveat. Day to day performance is not what I'm talking about. We're looking at the long term trends. We're looking at these trends over periods of months, So don't let the day to day gyrations confuse you. Look at the overall trend. So to wrap up our conversation, here are indices, indices are important to you because number one and disease tell you how the various companies that are part of the index did how they performed. And second, your interaction. Your consumerism drives those various companies within that index. So by looking at the index and seeing that it's going up or down, it gives you a very good general sense of the type of stocks that are going up or down. Following the index gives you a very quick pulse off the stock market. It gives you a very good pulse of the economy, and it gives you a very good pulse off your own consumerism, your wallet. That's why these indices are important, and that's why you keep hearing about them. Wherever you go, let's move on to the next lecture. 3. Meet the Sectors: Components of the Stock Market. : Okay, Welcome to lecture for now, and we're going to continue our study here. We're going to discuss indices and what belongs under them called Sectors. Now, a fair question for you. Ask us. They Hey, we already know about Indices. We know about the various indexes out there. Why do we need to know about these sectors and why our sector is important in this thing about stock market? And that's a very reasonable question. The primary reason why indices have been broken down into sectors is similar to an example I using our previous lecture. How do you measure companies which, even though there are big multinational companies, are in entirely different marketplaces? How do you judge the profits of one company that say has to you go and dig for gold versus another company that needs to develop a software once and then just keep copping it and selling it? Each of these companies will have their own distinct set off profit margins and other issues that they need to deal with. And it would not be fair for us when we're looking at these big companies to say that Hey, all companies are the same. You know that, and I know that they certainly are not. Each company is different, and each company has its own unique market. And by that I mean each company sells to a very particular group of people or a group of businesses or group of consumers. So sectors allow us to measure apples to apples and oranges to oranges because similar companies get put into similar sectors. Now, what could be a sector? Give me an example for sector. Well, how about telecommunications? How about the Internet service providers? How about real estate? How about those rates? How about the grocery stores? How about the guys who do heavy industrial materials and on and on? So sectors are categories. Currently there are 11 sectors within the S and P 500. The guys and gals of people who developed the index said, Hey, we can take the entire 500 companies that are within our index, and we feel that we could divide them in 11 distinct types off markets. So they created 11 different sectors, and the point again, we got to keep repeating it. The point again is similar. Companies need to be measured against similar companies. It does not make sense to measures, say, a General Motors back to a Netflix, those air distinctly different markets. So let's play a quick game. I'm going to say, Give me three companies in the financial sector. Could you perhaps name me three large companies that you know off? How about Goldman Sachs? How about Bank of America? How about American Express? How about Wells Fargo? So you get it. Big banks and other big financial companies are within the financial sector. How about you give me a few from the information technology? Well, we've been talking about that all day with that Amazon. We've got Netflix, We've got Microsoft. We've got Cisco, We've got Intel and on and on. So what we'll do now is I'll quickly run through the 11 different sectors and then from there, I want you, which will be part of your project, to find one or two companies in each of those sectors. And if you feel like it, track them and follow them over the next month. So currently the 11 sectors within the S and P 500 are as follows. You've got communication services, consumer discretionary, consumer staples. What does that mean consumer discretionary stuff that you may need to buy stuff that you may buy. If you have discretionary income companies like that get put into that category, then you have consumer staples. These are things that you need every day. I would imagine grocery stores and things like that are in that sector. Then you have energy, you have financials, you have healthcare. You have industrials, big companies that make things. You have information technology, you have materials. These are companies that make the raw products for the things that companies need to make to sell you things. You have real estate and you have utilities. We've talked about market cap before. If you remember, market cap is nothing more than the multiplication of the number of shares outstanding by the current share price. So on these different 11 sectors that I've given you, would you care to guess which sector is the largest in the U. S. Economy? And I don't think you're too off when you said this. Its technology information technology has a market capitalization off roughly $9 trillion. These numbers just crazy. $9 trillion. So if you recall from our earlier conversation, the S and P 500 has a market capitalization off $25 trillion. And if information technology is worth nine trilling of that, that basically tells you if you divide nine trillion by 25 trillion, which is apart over whole, you get 36%. 36% of the S and P 500 has a information technology focus. So now we've got sectors and within those sectors, we get to place our various stocks. So this should take you to another place. And let's look at it in aggregate, meaning in togetherness. So now if you hear that the S and P 500 closed up, say, a percent and 1/2 1.5% for the day before you would have ignored this information and you had said, Okay, it's up 1.5%. So what? But now, based on the information that you've just learned, you're now going to ask yourself the following question. And I always want you to ask this question. You're going to say this. The S and P 500 was up 1.5% good. That means generally speaking, the s and P 500 had a plus data Green Day. And the question that you should now ask yourself is I wonder which sectors performed the best today and which sectors performed the worst today. So this now gives you a more granular granular means that you're now able to dig in a little bit more deeper into the, uh, information presented. And now you have a much better way of analyzing the performance of the S and P 500 because now you're not interested just in the entire 500 you want to know Hate which sectors did good, Which sectors did bet, and that's a fair place to be a So let's see, what do we do with this information? Well, let's just say that information technology, because it's the largest off the S and P 500 sectors, let's say that they keep returning higher and higher returns compared to the other sectors . Well, I think it would be fair for you to say OK, information technology keeps outperforming. Therefore, it's safe for me to assume that the consumer has money because information technology companies sell stuff both to us as consumers and to other businesses. So with this granular information, you can do something else. You can now say, You know what? I keep seeing that information technology keeps outperforming the other sectors within the S and P 500. Therefore, I think it's safe to assume that large companies, large businesses and consumers people like you and I are buying technology related stuff. Therefore, if you had money to put into a particular stock, you may say, instead of me buying a utility, I may want to buy a information technology company. I may want to buy myself a Amazon or a Microsoft or an apple or an video. Why? Because these companies are within these sector of information technology and information technology is outperforming the other sectors. So now you have a place where you can hone in and say, I want to be here, and this is another benefit of knowing which particular sector your stock belongs in. So here's a checklist, and I'll have this in your work. She these air the question that you need to first answer. You need to be able to answer what index tracks my stock. What sector does my stock belong in? What other companies, which are similar to my company are within the sector, and how has their performance been? And finally, how has the stock market performed? How is my sector performed and how, as my stop performed Now you can make a apples to apples comparison. So, folks, these are the type of questions you've got to keep asking yourself when you receive information. When you pick up something from the newspaper. When you pick up something online, I want you to ask questions that take you in a little bit deeper. You want to get a little bit more detail about the information that you're receiving. And the key take away from sectors, of course, is that if sectors air performing uniformly well, that means that they all seem to be going up. That should kind of tell you that the economy itself is humming along things air well. Companies are making products, and people are buying products, other businesses or buying products. Therefore, money is flowing freely and the economy is on a upward trajectory. So you could now combine this information with your GDP. With your consumer sentiment information. With your retail sales information and boom, you're suddenly making much more smarter decisions And that's why I would like you to know sectors with that. This gives us a perfect opportunity to move into our next lecture, where we get to now ask a few questions about the economy. 4. Meet the Economy & Why is it so Important.: All right, welcome back. This is electrified. And now that you've comfortably started tracking into season sectors, let's add another variable to the equation. We're now going to start tracking the economy, its not as tough or as daunting as it sounds. So stay with me. We'll get through this. I feel that one of the biggest mistakes rookie traders are experienced people make in the stock market is that they fail to consider. That means that they're not paying attention to the health of the economy when they begin their investing or the begin their trading. This is a fundamental mistake, and people make this all the time. I want you to start getting into the habit of I want you to start considering the help of the state of the economy when you're thinking about your sectors, your indices and the various stocks, mutual funds, whatever you want to buy, even if you want to buy crypto, you still want to understand where is the economy relative to all the other things that are out there? The economy is a must. So why is the economy such a big deal? Well, simply put, the economy is the fuel that pushes all these stocks higher. The economy is the fuel that propels you to go out and buy things. If the economy sucks, we're not going to be out there buying things. And if we're not buying things, cos they're not going to be able to sell things, and if companies are able to sell things, their profits will fall. Eventually, their stock prices will fall and will be in a big old recession. That's why the economy is a thing that you must fall all the time. I throw out some crazy numbers. Earlier, we talked about 300 billion. That's the amount of money being traded on a daily basis in the U. S. Exchanges. Then we talked about 25 trillion. That's the combined market capitalization of the S and P 500. And now here's another multi trillion dollar number. 20 trillion. What is this number? This number 20 trilling is perhaps the most important number we have in our economy, and that is the combined value over GDP are gross domestic product. Now what the GDP does and we're not going to get into deep economics here, but just think of it this way. the GDP measures, the total value of all the goods and services that we produce in this country. Is that simple the total value of all the goods and services we produced in this country? And what's that number close to $20 trillion per year per year. So hopefully you're seeing that those 80 beauty numbers that we ran across in the stock market pale in comparison in their entirety. When we're looking at the entire health and state off our economy and now add global economies to this and suddenly you see that the multi trillions of dollars are much higher than any activity that's happening in the stock market, therefore, economy over stock market. So as we continue digging in deeper, I want you to create a foundational question for yourself. The question is always going to be, Hey, is the economy expanding or is the economy shrinking? You've got to keep that in mind. Then you ask yourself the next logical question. What happens to my stocks if the economy suddenly goes down? What happens to my stocks if the economy continues expanding? What happens to my stocks if the economy expands to the upside at a much higher rate. These are all questions that you need to ask yourself. And what you're doing is you're gaming. That means that you're thinking through all the different possibilities and you're coming up with the answer, which will help guide you as you continue your trading and investing. All right, So before you go out and buy your first share or you begin your investment career, let's first ask a couple of questions. We're gonna ask ourselves, What is the state of the economy and what are the indicators that could use to get a better gauge, a better measurement of the economy? So, first we're going to track the GDP. You want to ask yourself, Hey, is the GDP growing or is the GDP shrinking? I'm going to link to the economic indicators in our project sheets. So that's something that I really want you to start tracking as well GDP on a quarterly basis. Now, another reason why the GDP holds such an important position in our overall economic indicators off the U. S. Economy is that if we have two successive negative quarters in the GDP, that means that we're down for 2/4 in a row, we get into a recession. That's right. The official definition of a recession is just that two successive negative quarters in GDP . So that should give you an idea that the entire United States economy and the definition over recession is dependent on this key metric, the GDP. So please start following the GDP and ask yourself, Hate, is GDP expanding or is GDP shrinking? Now let's move on to the other two indicators. I want you to track the other two indicators essentially fall under a single category, and that category is off the consumer, you and I, me and you, us and a whatever way you want to look at it. We are responsible for 70% of the U. S. GDP. So if we stop shopping, if we stop buying, guess what happens. The economy comes to a sudden and immediate halt. This is what happened essentially during the 7 2008 crisis, wasn't it? Where people suddenly didn't have money, their house mortgages became more expensive than what they could afford. So the consumers froze up and they stop buying things. And what did that do that put us into a huge recession? so measuring the consumer is critical. It is that one of the most important things that we could be doing out there after measuring the GDP because we as consumers are responsible for a huge chunk of the total GDP . So the first indicator I want you to strike following and tracking is a your assume. Michigan's consumer sentiment index. They conducted monthly survey. They call people, they get their opinions and their sentiments about the economy. And they really want to know. Is the consumer going to be buying more things? Or are they gonna hold off from purchasing things? Because you and I, as consumers are 70% of the GDP? Our opinion actually holds a lot of suede because if you and I stopped purchasing things, things go bad. As we said earlier, the huge recession, the great recession of 2007 and eight where did it come from? It came from a sudden freezing off the credit markets, Yes, but the other secondary effect of that was that you and I stopped buying things. Is that simple? We're not buying things. Let's now pull this example into a person level and let's look at it this way. Say, unfortunately, that you've been laid off your now unable to pay your bills regularly. And in fact, you've decided that I'm going to stop my screaming services. And next morning, the University of Michigan Consumer Sentiment Index people call you and they want to know. Hey, how are you feeling? Well, where you gonna tell him? You're going to tell him that I'm not feeling too good. I've stopped my online streaming. I've stopped purchasing things. I'm not having my cup of coffee and on and on. Well, they'll ask you Well, what are your future expectations? And you say, Well, I can't seem to be finding a job right now, so I'm bummed. I don't think things were looking well in the coming months for me. And they take your information, they john it down. They do some math on it and they come up with the number. Currently, As of making this video, the number is almost at all time highs. And if you look at the performance of the stock market, this really isn't a coincidence that the stock market itself is sitting your all time highs because you and I, as consumers are feeling very optimistic. You and I, as consumers are actually going out and buying things. And when we buy things, what do we do? We buy things so large corporations have to make things, and when they make those things, they have to get rid of the inventory and we're out there ready to accept that inventory. So the cycle continues and things seem to be looking good right now. And now I want you to connect this to your into season sectors. So if consumer sentiment is looking good, if GDP is looking good, what do you think is happening to your sectors and what do you think is happening to your indices? And the answer, of course, is generally speaking, they all should be headed upwards. And that's the key. Point is, once you start measuring consumer sentiment, meaning when she shared measuring what the retail customers doing Once you start measuring what the economy is doing, you are any very fair position to say that. Hey, if these two things are looking good and the economy is expanding, guess what. I think the sectors and the stock market itself should be rising. That's how you want to start thinking, and the third index that I want you to start tracking is the retail sales. This number is released on a monthly basis, and they track essentially the buying that happens in retail stores. And now, because more and more for shopping is happening online, they've begin tracking online purchases well, so now they want to peek directly into your wallet. The consumer sentiment is getting your opinions, but the retail sales numbers are actually getting facts because they're able to actually see how much you and I are spending. So if you and I suddenly spend a lot less this month compared to last month, a fair question comes up. Hey, what happened? Did a large factory closed down somewhere? Or did a large corporation suddenly lay off a bunch of people They would want to know? Why are you spending less money this month than you were last month? And that's what retail sales do. The measure in numbers. They measure our purchases on a month to month basis, and they compared to our prior months, and they compare to seasonality, for example, you and I will, of course, by more things in December, we may buy even more things say in the November December months. But in January we may want to take time off because we spent so much money in the prior two months and the retail sales numbers will account for that. But generally what we're looking for is an increase in month to month expenditures were looking for more buying, and we're looking for better sentiment. So let's do a quick review. We've covered a lot of material here, and I want to kind of connected into one line of thought for you. First you want to know? Hey, what indexes? Tracking my stuck second. You want to know? Hey, what sector does my stuff belonged to? Third, you want to know? Hey, how is my stock performing relative to the other stocks in my sector? And then you want to say, How is my stuck performing relative to the stock market? Then you want to ask yourself, I also want to know what's happening to the GDP. Is the GDP headed up or down? Then you want to ask yourself house consumer sentiment. Are we happy or RB Feeling sad, are weak, positive or RB negative. Then you move it on to retail sales, and you ask yourself again, our customers, that means are you and I are re out there buying things or heavy decide not to buy things. This is how you wanna think and you want to think in a circle. You want to go around the equation and you want to analyze it and look at it from all the different angles. And that's what's going to make you a sophisticated and intelligent investor not taking a tip that you receive off the street corner. Do not trade and invest that way. So a final quiz before we wrap this up, What stock would you pick if the GDP is going up? If the economy is going up, if the consumer sentiment is going up, if retail sales are going up? If all the good things were happening, what would you want to do? By now? You've hopefully realized that trading and investing is a systematic approach, and it is a logical and thinking person's approach, and that's what you want to start doing 5. Meet YOUR NEW STEPS!: Well, hello and welcome back. We're now in our final chapter. The recap. I hope you found this class productive. I hope you found this class informative. And I hope you consider following me because a lot more classes are coming and we'll continue our conversation just like this. I'm going to try to make the complicated topics of the economy and the stock market much more easier and simpler to understand. So, your final project, what is this going to be all about? While your final project is essentially going to be a worksheet in which I've laid out the various indicators that I want you to start following the economic indicators, I'm going to lay out the various sectors. I'm going to pick some stocks in there. I'm gonna ask you to pick some stocks and then what you're going to do for the next 30 days , essentially one full month. I want you to start tracking that information. I want you to see how retail sales numbers emerge. I want you to see how consumer sentiment emerges. I want you to look at and ask yourself How is the GDP doing? I want you to ask questions such as hay, which sectors within the S and P 500 are moving on which sectors are doing the worst. You want to ask yourself which index which indices are trading higher or lower than the rest of the market. So these are the type of questions that you're going to be answering in your project, and your project is something that you carry along with you put it on your phone, printed out, do whatever you like, but please use it for a month. And I really believe that after you've done this for a while, you're going to start thinking about the stock market in a much different and more logical way. And that's ultimately going to make you a better and more informed trader and investor. So the final recap house my stock doing? How's my index doing? How are my economic indicators doing? Which direction is that GDP headed in? Is it going up, or is it going down? You want to ask yourself, How is the consumer sentiment? Is it going up or is it going down? Is it going up real fast, or is it falling? Real power retail sales are they exceeding month to month expectations or our retail sales suddenly tanking. Another question we'll ask yourself certainly is. How are the various sectors doing? How is my stock doing relative to the other sectors? And how's my stock doing relative to its own sector? Then you want to find out how is my stock doing relative to the market? That's we're gonna look at the various indices, all of these air important because the circle off life in the stock market is just this. You and I go out and buy things, companies that have to make things because we have money and they want to sell us things. And one day you and I will suddenly say, Well, we can't buy anymore And then those companies will crash and burn. There'll be a recession and then the cycle begins all over again. This is the economy. With that, I wish you and your family successive days ahead and I'll see you in the next class. Shares