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The stock market: A bunch of bull



College of Charleston


The stock market: A bunch of bull


What is the stock market and why is the market important? First, the stock market is the aggregation of buyers and sellers of stocks which represent a certain amount of ownership claims on any given business. Some companies who do not want to be publicly traded, like Chick-fil-a, choose not to be put on the market but also forfeit the benefit of investment.

Secondly, the stock market is important to not only the buyers and sellers, but every citizen as well. The stock market expresses confidence in everyday transactions and confidence in large companies and corporations. Through understanding of how the market works and becoming involved in the intricate process, benefits and investment opportunities arise. On February 5, the market dipped slightly and made headlines across the nation and globe as global markets were affected.

So how did the stock market get here? A mix of tax cuts and companies returning to America based on Trump’s policies has led to an increase in confidence for investors. With the promises of new factories opening in the country, wage increases, and tax returns, more money is able to be invested into the market. As a result, overconfidence has finally been shown and weaker investors sold, resulting in the dip we saw last Monday. The market is naturally adjusting.

The Dow Jones Industrial Average fell more than 500 points at opening Tuesday—a day after it plunged a record number 1,175 points, around 4.6 percent. The percentage is the most important factor, not the number, as the loss seen last Monday did not make the top 25 worst Dow days. However, what does a hiccup like this represent for the nation or CofC students?

For the nation, minor corrections like what was seen last Monday are normal as stated above when the stock market has made such tremendous gains recently. No money is lost to shareholders or individuals who have 401K's unless shares were sold during the slight overall dip. A save rather than spend mentality is key to understanding the intricate nature of the stock market. Editor in Chief of and famous for his one liner: “facts don’t care about your feelings”, Ben Shapiro notes this principle while the DJIA dipped:

This dip is a result of natural market correction and does not suggest any notion about the health or legitimacy of the economy as a whole. The market, in simplest terms, is a somewhat unpredictable rollercoaster. The market constantly goes up and down as shares are being bought and sold. The effect of this dip was seen in global markets, however, gains are being made and recovery is underway. As confidence returns, so will the health of the market.

For Charleston students, it is important to consistently watch the stock market and economy, as upon graduation, the market will have much more prominence in our lives as employment comes. Investing early and being involved early with a 401K can help set up a prosperous retirement or future investment. To make the most of the market it is suggested to buy low and stay in it for the long ride. Saving rather than spending will lead to a much more fruitful future.