Clowns to the left of me (real estate), Jokers to the right (bonds), here I am stuck in the middle with you (equities)

This is a guest post on trading from Tusk Trader (check out the newly launched site: www.TuskFund.com), an experienced Bay Street trader who will be writing here until Tusk’s own blog is set up. Tusk had a front row seat to the twists, turns, and almost collapse of our capital market systems a few years ago and provides a unique perspective you won’t find anywhere else. For most people, financial literacy is the elephant in the room. Let Tusk Trader help change that. If you are on twitter, make sure to follow Tusk at @TuskTrader

Hello Reader, I would like to introduce you to the equity markets. Equity markets, this is Reader.

There has been a lot of chatter from some Canadian financial leaders about the high probability of a cooling housing market. Real estate has been a solid performer for many Canadian investors over the last 20 years, but with it’s outlook cooling, homes are likely to return to being just a roof over our heads and not the pension plan some Canadians have been banking on.

The bond market has had decades of overall favor in the falling interest rate environment. The bond market has not been just a place for investors to hide from a volatile stock market, but a place to thrive over the long term. This bond market success for many will soon be changing as well.

A shift in investing and asset mixes is slowly underway. Rates are rising soon and the housing market is more than due for a pause. I think it is time that investors focus on getting reacquainted with the equity markets. This re-acquaintance process is not about finding the next big stock that will run up in a week or about putting all of your retirement savings in the stock market and praying it only goes up.

It is about actually learning about how the markets function, why they exist and what the moving parts are. The equity markets are not about 50% returns and huge risk. Many people trade their at-home investing account without basic capital market knowledge. Being able to trade should not be confused with a properly managed equity portfolio.

Another pitfall I hear of are investors who fill themselves to the brim with mutual funds for equity exposure because they don’t want to deal with learning more about the stock market.  It can be a very costly decision long term and one I consider very risky overall. Being uninformed about an investment is always very risky.

It truly isn’t hard to learn more about the equity markets and learning more does not have anything to do with trading stocks from home. The more you know, the more investing options you will have to choose from and the more educated your decisions will become.  Knowledge starts with the basics and that is where the reader seeking knowledge should begin. Whether you have been interested about the equity markets and have just not gotten around to learning more, or if you have avoided the equity markets like the plague out of fear, just start. Start tomorrow.

Or if you need to, start on May 1st. Finish your taxes first.

Thanks Tusk. Make sure to check out the site: www.TuskFund.com or follow Tusk Trader on twitter: @tusktrader

 

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Showing 3 comments
  • bigcajunman

    At first I thought it was Preet making a comment about having dinner with me on Wednesday, but still an interesting idea :-)

    • Preet

       @bigcajunman Well, you *were* on my right.

  • jdbucky

    Great post. Don’t default financial or other decision to “experts” through ignorance. Would have been better if some readings had been suggested. Most of the reading out there talk about savings but haven’t found a book on how and why markets work.