The stock market

Although it can be confusing, the stock market is an integral part of United States commerce. For new investors, especially if they are starting early, the stock market can be filled with opportunity, but you have to know what you’re doing. “It is never too early to start investing in your future,” said Rocki Dewitt, dean of the UVM Business School, when asked if investing would be beneficial for students. Dewitt also said that she encourages even seventh and eighth-graders to begin learning about investments and how the stock market works.A new investor is suggested to begin through working with “the virtual stock exchange” that can be found online at http://www.vse.marketwatch.com. In this case, there is “no downside, because you don’t [invest with] any real money,” said UVM finance professor Michael Tomas.Dewitt encourages students to look at the Wall Street Journal and to start looking at advertisements to get ideas of where to invest. She recommends the Web site the Motley Fool, found at http://www.fool.com, and Tomas championed http://www.Investopedia.com as another good Web site to begin learning about the market.”The Motley Fool” provides up-to-date commentary on tradable companies. This Web site informs its users about stocks that have a high potential for growth, or a high possibility for decline.Also on Investopedia, there is a section that is solely for “young investors.” It provides a list of articles geared towards investors under the age of 30, and is particularly helpful to students looking to invest in the stock market. After the initial research, the question arises of what to put in a stock portfolio.”Think from a demographic stand point of where there are market opportunities,” said Dewitt. Specifically, look for “companies [that] make a product, or provide a service where there will be rapid growth [causing] your initial investment to appreciate.”A common way for new investors to get started, since the majority of students are too poor to have their own stock broker, is to begin investing alone. This is not as risky as it might seem since “the most you’ll ever be out is the money you put in,” said Dewitt.Dewitt advises new investors to “develop a set of trading rules about your portfolio,” deciding when to sell, when to buy and how much money can be invested.The other option for beginners is mutual funds, recommended as a safe place to start by both Dewitt and Tomas. A mutual fund gives an investor “exposure to a lot of stocks at once,” said Tomas, since this fund “pools money from a whole bunch of investors,” said Dewitt.On the other hand, the Motley Fool states that “investors are probably best off buying an index fund.” According to Investopedia, an index fund is “a type of mutual fund with a portfolio [of stocks] constructed to match or track” the movement of a specific subgroup of the market. The better returns of the index funds are only due to the lack of “fees [that mutual funds] charge you to be a shareholder,” says the the Motley Fool.The availability of index funds simply provides an investor with an alternative to mutual fundsEven with these options, “at the end of the day, any investor needs to follow one major principle called caveat emptor,” Dewitt said. In English it means ‘buyer beware’ . . . because there is nothing that says you have to get your money back.”