Stock Market For Beginners 2026 _ Step by Step Guide

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Stock Market For Beginners 2026 _ Step by Step Guide #how

Transcript

00:00:00I want to welcome you to the Stock Market for Beginners Ultimate Guide.

00:00:04If you're new to the stock market, then this video will be perfect for you.

00:00:08So I want you to know that every experienced investor in stocks was once a beginner.

00:00:14So it is an honor to guide you in your stock market journey to help you achieve financial

00:00:19success and financial freedom.

00:00:22Now, let's begin.

00:00:23So here is what we're going to cover in today's Stock Market for Beginners video.

00:00:27You are not expected to absorb all this information in one sitting.

00:00:32So please subscribe and watch this piecemeal at your own comfortable pace.

00:00:38So let's begin with this.

00:00:40You should invest in the stock market because it is a proven way to grow your wealth.

00:00:45Just look at the historical data.

00:00:47These are the average annual returns that investors make in the stock markets.

00:00:52In the past 30 years, the stock market has gone up by an average of 9.9% a year.

00:00:59If you look at the past 50 years, it's 10.8% a year.

00:01:03In the past 100 years, an average annual return of 10.5% a year.

00:01:09But I'm going to tell you this because I want to be upfront with you.

00:01:11Yes, there are stock market crashes, but over time, the stock market recovers and essentially,

00:01:19the stock market keeps going up.

00:01:23It's like home prices.

00:01:25Generally, real estate tends to increase in value, so you know this, but I want to make

00:01:32this clear.

00:01:32Here are the median home prices in the past.

00:01:34A hundred years ago, a home cost, this is the median price, $3,200.

00:01:42Fifty years ago, you could buy a home, the median home for $33,000.

00:01:47Thirty years ago, the median home price was $126,000.

00:01:51And today, the median home costs approximately $400,000.

00:01:56So it just keeps going up.

00:01:57And it's the same thing with the stock markets.

00:02:01The reason why financial assets, such as properties or stocks, continue going up is partly because

00:02:08of inflation.

00:02:10However, the stock market does outpace inflation.

00:02:14But ultimately, you want to put your money to work by investing it, and the stock market

00:02:19has a proven track record of growing your money.

00:02:23Now let's proceed.

00:02:24It is essential that you understand how the stock market works.

00:02:29I don't want you to throw your money in stocks into the stock market if you don't understand

00:02:34the basics.

00:02:35So in this section, let me explain to you what are stocks, how to invest in stocks, how

00:02:42people get wealthy by investing in the stock market, and what stocks are best for beginners.

00:02:48So let's get started.

00:02:49I want you to know that the stock market is very simple.

00:02:52So let me explain to you what stocks really are.

00:02:55So let's just say that you own a business and so you're a business owner.

00:02:58And let's say that you want to raise a lot of money for your business to grow and expand.

00:03:04So what do you need to do?

00:03:06You need to find investors and a great place to find investors is in the stock market.

00:03:12Now in order for you to raise a lot of money for your company, you need to sell a portion

00:03:17of your ownership in your company to investors.

00:03:19And that's what stocks are stocks are just units of ownership in a company.

00:03:25So if you buy stock in Apple or Microsoft or Tesla, you are an owner of the company.

00:03:32So you probably own a very small piece of the company, but you are still technically an owner.

00:03:37Therefore, one person does not own Apple or Microsoft or Tesla.

00:03:42So there are thousands of people that own stock in those companies.

00:03:45So those companies have thousands of owners, which are the stockholders.

00:03:50Now let me tell you how to invest in stocks.

00:03:53So the stock market is a big marketplace where you go to buy and sell stocks to participate

00:03:59in the stock market.

00:04:00You need an online brokerage accounts.

00:04:02So there are a lot of online brokerage accounts to choose from.

00:04:06I'm going to leave a link down below to some online brokerage accounts that are offering

00:04:11signup bonuses with zero fees, and there's no catch.

00:04:14It will cost you nothing.

00:04:17And some of these signup bonuses, they can be substantial.

00:04:19So please be sure to check them out.

00:04:21So you open up an account and then you transfer money from your bank accounts to your brokerage

00:04:27accounts, and then you're going to have money in your brokerage accounts, and then you're

00:04:30going to be ready to buy stocks.

00:04:32So you want to buy stocks in good companies.

00:04:34That's because if a company does well, then the value of the company increases.

00:04:39If the value of the company increases, then the price of your stock goes up.

00:04:44And in many cases, if a company is making a lot of profits, the company will take those

00:04:49profits and pay a dividend to whoever owns the stock.

00:04:54So you don't have to do anything to collect a dividend.

00:04:56It just gets deposited into your accounts, which is pretty awesome.

00:05:00So this is passive income in its truest form.

00:05:03Now, if you want to sell your stocks, it's very easy.

00:05:06So you may want to sell your stocks for whatever reason, such as you just want to cash out.

00:05:12Maybe you don't like the company anymore.

00:05:14Maybe you want to sell your stock to have money to buy a different stock.

00:05:18So you're free to do as you please.

00:05:20And again, this is all free, no fees, zero commissions.

00:05:24So when you sell your stocks, you'll have money in your brokerage accounts because again, you

00:05:29sold your stocks.

00:05:30And whenever you want, you can transfer that money back to your bank accounts.

00:05:34Or you can let that money just sit there.

00:05:37Some brokerage accounts, they'll pay you interest on the money sitting in your accounts.

00:05:42Or you can use that money to buy stocks, you know, whatever you want.

00:05:46Now, I want you to know that many people get wealthy in the stock markets and there's not

00:05:50just one way to do it.

00:05:52I'm going to tell you what most people do.

00:05:54And you can try to see which style is most appealing to you.

00:05:59Buy and hold, dividend investor, speculator, trader.

00:06:04And let me explain these styles to you.

00:06:06Buy and hold.

00:06:07Hold.

00:06:07Some people just buy stocks and they just hold onto them for a very long time.

00:06:11We're talking about years, even decades.

00:06:14Some people they'll even hold onto their stocks until they die and they'll put it in their will.

00:06:19So this is a set it and forget it approach.

00:06:22Traders.

00:06:23Some people in the stock market will try to buy and sell, buy and sell frequently and make

00:06:28some money.

00:06:28So these people are known as traders.

00:06:32Traders are not interested in holding a stock for the long run and watching the company grow.

00:06:37So I would recommend that beginners in the stock market, so if you're a beginner, please

00:06:42refrain from trading with a large amount of money.

00:06:45I would recommend that you get some practice in first.

00:06:48But it's true.

00:06:49Many professionals get rich by trading, but that comes with experience.

00:06:54Speculators.

00:06:55Some people buy smaller, riskier stocks that have a lot of potential and could skyrocket

00:07:01in price.

00:07:02So these are speculators.

00:07:03I'm not saying that in a good way or a bad way.

00:07:06People speculated on Tesla early on and made a lot of money.

00:07:10So you could say the same thing for Amazon or Walmart and so many other stocks.

00:07:15But there's other people that speculate on stocks and lost a lot of money.

00:07:19So if you're going to speculate, don't invest too heavily in one stock and do not fall in

00:07:25love with a stock.

00:07:26Your emotions can cloud your judgment.

00:07:28Dividend investors.

00:07:30Some people buy stocks primarily for the dividends.

00:07:34Many investors take their dividends and reinvest them to get more dividends and your wealth

00:07:39accumulates over time.

00:07:41So this is a great way to build your passive income.

00:07:43So you can actually set your accounts to reinvest your dividends automatically.

00:07:48It's called a DRIP, Dividend Reinvestment Program.

00:07:51I am personally a big fan of dividend investing because you literally get paid for doing nothing.

00:07:56So if you're dividend investing, your money is making you money.

00:08:00So you should know from the get-go which style is most appealing to you.

00:08:05It could be more than one.

00:08:06It could be a combination, but there's no one right answer.

00:08:09There's no one right method.

00:08:11So whichever path you take, you should understand the pros and cons of that method or that style.

00:08:17Now let me tell you what stocks I think are best for beginners.

00:08:21There will be so many stocks to choose from.

00:08:24Small companies, big companies, companies in different sectors, energy, technology, real

00:08:29estate, retail, banking, pharmaceuticals, etc.

00:08:32There will be companies that focus their sales in the US.

00:08:34There will be multinational companies.

00:08:36There are just so many options.

00:08:38I would suggest that as a stock market beginner, you invest in bigger and more stable companies.

00:08:45The reason why I'm saying this is because of risk and reward.

00:08:49If you invest in a smaller, no-name company, there's a higher probability that you can lose

00:08:54a lot of money.

00:08:55As a beginner, you should get a feel for the stock market, take it easy and just learn.

00:09:00Once you get more experience and knowledge, then you can slowly move out of your comfort

00:09:05zone into stocks that offer more risk and reward.

00:09:09If you don't want to take this advice and you want to jump straight into risky stocks,

00:09:13then I beg you, please do so with a smaller amount of money.

00:09:18Please take my advice.

00:09:20The stock market is not a get-rich-quick scheme.

00:09:23In the stock market, you want to be an investor.

00:09:25You do not want to be a gambler.

00:09:27And I want to see you make money.

00:09:29As a beginner, it is better for you to make a little bit of money than to lose money.

00:09:34So I would recommend sticking with safer stocks to start and learning little by little.

00:09:40Slow and steady wins the race and it's a marathon.

00:09:42And just so you know, if you want to be very safe and diversify, then you can always buy

00:09:47index funds.

00:09:48An index fund is a collection of stocks.

00:09:51It's like a big basket of stocks where you get diversification.

00:09:55So it's a way for you to buy a little of almost everything, which decreases your risk.

00:10:00Now in the stock markets, you can choose how to invest your money.

00:10:05So let me give you two options and you can decide which method that you prefer.

00:10:10So option number one is that you can search for good stocks to buy.

00:10:15This is known as stock picking.

00:10:17So you're trying to pick the winners.

00:10:19If you're going to stock pick, then it's important that you spend time monitoring your stocks to

00:10:25ensure that everything is going well.

00:10:27So later in this video, I will teach you more about stock picking.

00:10:30Your option number two is index funds or ETFs.

00:10:34So if you don't want to become a stock picker, you can invest in index funds or ETFs in the

00:10:41stock markets.

00:10:42If you invest in an index fund or ETF in the stock market, that's like buying a little bit

00:10:47of all the stocks in the stock markets.

00:10:50So there's pros and cons to this approach, which I will tell you about right now.

00:10:55So today I'm teaching you about index fund investing, which includes what is an index fund, the pros

00:11:01and cons, index funds versus ETFs and how to invest in them.

00:11:07So let's start with this.

00:11:08What is an index?

00:11:10An index is simply a grouping of stocks or bonds or other securities.

00:11:14So, for example, the S&P 500 is an index of the 500 largest publicly traded companies

00:11:20in the US.

00:11:22So the thing is that you cannot invest directly in an index, but you can invest in an index

00:11:29fund.

00:11:30Now let me explain to you how an index fund actually works.

00:11:34So let's say that you have an index fund that tracks the S&P 500.

00:11:38So that index fund will buy shares of stock in all the companies in the S&P 500.

00:11:45Therefore, the index fund will mirror the performance of the S&P 500.

00:11:50If the S&P 500 goes up 1%, then that index fund, it will likewise go up 1%.

00:11:57If the S&P 500 goes down 1%, then that index fund will go down 1%.

00:12:03Now, I want you to think about that, really think about what I just said, because there's

00:12:07going to be pros and cons to this.

00:12:09So let me tell you what they are, and we'll start with the cons.

00:12:12Because the index funds will mirror the markets, that means that if you invest in an index fund,

00:12:18then you cannot outperform that benchmark.

00:12:21So for example, if you invest in an S&P 500 index fund, then you cannot beat the markets.

00:12:27So if you want to become a superior investor, an index fund may not be right for you.

00:12:33Another downside with index funds is the lack of flexibility.

00:12:37So for example, if there are some stocks that you don't like in the fund, then unfortunately,

00:12:43you're going to be stuck with them.

00:12:44It's take it or leave it.

00:12:46That means that if there are stocks that are underperforming in the index fund, you can't

00:12:51cut your losses and you can't have them sold off.

00:12:54And another drawback is the tracking error.

00:12:56An index fund will not perfectly track an index.

00:13:00So if the S&P 500 goes up 7%, the S&P 500 index fund, it might go up 6

00:13:06.95%.

00:13:08And you may be like, hey, where's the rest?

00:13:11Well that difference, it includes the cost to run the actual index fund.

00:13:16So sometimes the tracking error may be tiny, like a difference of 0.01%.

00:13:21But with other index funds, it may be much more.

00:13:24But there are also maybe tracking errors if an index fund uses derivatives.

00:13:28In those instances, an index fund will not track precisely.

00:13:33Okay, so we just got all the bad stuff out of the way.

00:13:36But now let's talk about the good stuff because there are a lot of benefits with index fund

00:13:40investing.

00:13:41So the great thing about an index fund is that you can be hands off.

00:13:45You can become a passive investor.

00:13:48And this is great for someone that's new in the stock market or inexperienced.

00:13:53If you do know what you're doing, you're just too busy, let's just say that you don't have time

00:13:58to research individual companies or you don't have the time to pay attention to macroeconomic

00:14:02conditions, then this will solve the problem.

00:14:05So I understand that we're all busy, life gets in the way, and this may be a good solution for

00:14:11a lot of people to become a passive investor with index fund investing.

00:14:15So here's another benefit.

00:14:17So the truth is that most people are not good at picking individual stocks.

00:14:23If you're not paying attention to the economy, if you're not staying current on the sector,

00:14:27and if you can't read financial statements, well, that probably explains why.

00:14:31So it's hard for even the professionals to beat the markets.

00:14:35So research shows that from 2001 to 2016, active fund managers underperformed their benchmark index.

00:14:44So honestly, if you put your money in an index fund, then you're probably going to do better

00:14:48than most people.

00:14:49I do want you to know this stuff because most people, when they talk about index funds,

00:14:53they overlook this part.

00:14:55So recently, passive investing through index funds, it has been outperforming.

00:15:00However, active management generally outperforms passive investing when the stock market or an

00:15:07index is going down.

00:15:09That's generally because active managers that capitalize better during the market recovery

00:15:13phase.

00:15:14So in other words, when the markets are going up, an index fund tends to do better.

00:15:19When the markets are going down, active management tends to do better.

00:15:24Now, another big benefit is diversification.

00:15:27Diversification is so important for your investing portfolio because it lowers your risk.

00:15:33Index fund investing provides you with a simple solution.

00:15:36That's because when you buy an index fund, you're buying up a slice of up to hundreds

00:15:41or thousands of companies at once.

00:15:43With diversification, it's going to balance your risk and your portfolio will experience

00:15:48less volatility.

00:15:50Now, here's what I suggest to you.

00:15:52I would say compare the pros and cons and see if this makes sense to you.

00:15:56So to review, the benefits of investing in an index fund, it includes but are not limited to

00:16:02passive investing, dependable returns, and diversification.

00:16:06The drawbacks are you cannot outperform the lack of flexibility and tracking errors.

00:16:13So I hope you enjoyed that educational information, but I want to give you my,

00:16:17I want to share with you my opinion as well.

00:16:19So I'm going to speak freely.

00:16:21This is like a heart to hearts about index fund investing.

00:16:24So if you're going to ask me for my opinion about index fund investing,

00:16:28I believe that it depends on the investor.

00:16:30It depends on the individual person.

00:16:32But for most people, for most investors, I believe that index fund investing does make sense.

00:16:38There are more benefits than there would be cons or negatives.

00:16:42Because just think about how practical it is.

00:16:44Think about how convenient it is.

00:16:46You could just throw money into an index fund and you don't have to,

00:16:49you don't even have to know what's going on.

00:16:51You don't have to manage it.

00:16:52You can just focus on your job, your career, your friends, your family.

00:16:57You could focus your energy and your attention elsewhere.

00:17:01It'll be more stress-free.

00:17:03You don't have to make these big decisions.

00:17:05You don't have to keep up to date on the macroeconomic environment or company-specific news.

00:17:10So there's a lot of benefits that you have to take into consideration.

00:17:14So sure, the trade-off would be that you're not going to be the next Warren Buffett.

00:17:19So you need to ask yourself those types of questions and be honest with yourself.

00:17:23Are you trying to be the next Warren Buffett?

00:17:24Because if you are, then index fund investing is probably not for you.

00:17:28It's not a good fit for you.

00:17:30Not with the goals that you're trying to achieve.

00:17:32But if you're trying to find a place where you can park your money,

00:17:37excess cash as an investment, and you can do it passively,

00:17:40just check up on it passively and conveniently,

00:17:44then index fund investing might be a really good fit for you.

00:17:47But I do want to say this last part, and this is especially important to beginners,

00:17:51because when people are talking about index funds, they usually think about a very broad index.

00:17:58Let's just say the S&P 500, right?

00:18:00However, you can use index funds, targeted index funds to complement yourself as an investor,

00:18:08as an active investor.

00:18:09So for example, if I'm going to be actively participating in the stock market,

00:18:13then I'm going to be looking at stocks every day, and not necessarily buying or selling every day,

00:18:17but I'm staying up to date as an active investor in the stock markets,

00:18:21and I'm buying stocks in all different types of sectors,

00:18:24but I feel like that I'm lacking exposure in, let's just say, pharmaceutical stocks, okay?

00:18:31If that's the case, then I could use index funds, a targeted index fund like that,

00:18:38that specializes just in pharmaceutical stocks to complement my overall investing style.

00:18:44And the other approach is that if you do want to park most of your money,

00:18:49the majority of your money with a broad index, let's just say an index fund, an S&P 500 index

00:18:53fund,

00:18:54right?

00:18:55You can park the majority of your money in that vehicle, the S&P 500 index fund.

00:19:00However, if you really have that itch to buy and sell individual stocks,

00:19:06well, you can have the majority of your money in a broad index fund like that,

00:19:10a well-diversified index fund like that.

00:19:11But then additionally, you could complement that by buying the stock picks that you like.

00:19:19Let's just say, well, you really think Tesla is going to do good,

00:19:21or you really think Microsoft is going to do good.

00:19:23Then you could have the bulk of your money in an index fund,

00:19:26then you could use smaller amounts of money to make your stock picks.

00:19:30But the bulk of your portfolio will revolve around index fund investing.

00:19:35Now, let me answer some really good commonly asked questions about index funds.

00:19:40Are index funds popular? The answer is yes. Index funds were introduced in 1976.

00:19:47Investing in index funds is the most common form of passive investing.

00:19:52It is estimated that passive investing in the stock market makes up about 15% of the markets.

00:19:58That's the official stat. Some estimates are that it's over 30%.

00:20:04So yes, it's very common, very popular. So this is nothing new.

00:20:08Another good question is how do you invest in index funds?

00:20:12Okay, so it's very easy. You will need a brokerage account or retirement accounts.

00:20:16You pick the index that you want to track and then you buy shares of that index fund.

00:20:22So it'll be very straightforward.

00:20:24Another very good question is how much money do you need to invest in index funds?

00:20:30Most index funds have no minimum requirements.

00:20:32So it could be a great way to get started with very little money.

00:20:36And I'll answer this last question. How many index funds should you own?

00:20:42So that's going to depend on how diversified a particular index fund is.

00:20:46If you invest in a well-diversified fund, then you may only need to own one index fund or two

00:20:52index funds.

00:20:53However, if you invest in an index fund that's more targeted, then you may need to own more than one

00:20:59or two in order to create diversification.

00:21:02Now, it's very important that you understand this.

00:21:05There is no one right way to invest in the stock markets.

00:21:10You can successfully pick your own stocks, invest in index funds, invest in ETFs, or a combination of these.

00:21:18I recommend that you choose what is best for you.

00:21:22And to make that determination, it's important that you understand the differences between the three.

00:21:28Stock picking, index funds, and ETFs.

00:21:32So personally, the stock market, I do all three.

00:21:35I invest in index funds, I invest in ETFs, and I pick my own stocks.

00:21:40Now, in this section, you will get a better understanding

00:21:42on whether one or two or all three are a good fit for you.

00:21:48I'm going to answer for you, how are index funds and ETFs similar?

00:21:51How are they different? And how do you know which one is right for you?

00:21:55Okay, so I'm going to tell you the truth.

00:21:57The truth is that they are more in common than not.

00:21:59They have more similarities than differences.

00:22:01But I want you to be aware of the differences that could make an ETF or an index fund

00:22:06a deal breaker for you.

00:22:08I want to demonstrate to you what is going on with an index fund.

00:22:13So you could think of it like this.

00:22:15Let's say that you, me, my brother, your neighbor, and my Uncle Bob,

00:22:20we're all pooling money together.

00:22:23And with this pool of money, we're going to buy all the stocks in the S&P 500.

00:22:29And let's just say we do that, and let's just say that you want out.

00:22:34When you want to cash out your portion, the fund has to sell some of its holdings to pay you

00:22:39out.

00:22:40Now let's compare this to an ETF.

00:22:43So with an ETF, an exchange traded fund, you could think of it like this.

00:22:48Let's just say that you bought all the stocks in the S&P 500.

00:22:53And you package them all up into one bundle.

00:22:55And you did that 10 times.

00:22:58And I say to you, hey, can you sell me one of those?

00:23:02And you're like, yeah, sure.

00:23:04And I buy it from you.

00:23:05So it's simply traded from you to me like a stock.

00:23:10So I hope that helps to clarify what is going on.

00:23:13An index fund is a collection of securities that are financed by a pool of investors.

00:23:18An ETF is a collection of securities that are traded between investors.

00:23:24So that's it.

00:23:24That's the difference.

00:23:25But there are a lot of similarities.

00:23:28And let me tell you what those are.

00:23:30Both an index fund and ETF offer you a low cost solution, diversification, and a proven track record.

00:23:38So index funds and ETFs, they're both passively managed.

00:23:41This means that there's no human that is actively choosing what to invest in.

00:23:46Therefore, index funds and ETFs are low cost.

00:23:49They have a low expense ratio.

00:23:51Now, both index funds and ETFs, they will give you diversification because they hold a variety of assets.

00:23:58And index funds and ETFs generally outperform active fund managers over a longer period of time.

00:24:04Now, I want to tell you the differences.

00:24:06And this will help you determine which one is better for you.

00:24:09So the four biggest differences between an index fund and ETF are liquidity, minimum investment

00:24:16requirements, expenses and fees, and taxation.

00:24:20So let's get started with liquidity.

00:24:22You can buy and sell ETFs throughout the trading day like a stock.

00:24:27With an index fund, you can only buy or sell at the end of the day.

00:24:30Therefore, an ETF is more liquid.

00:24:34So this probably will not make a big difference for most long term investors.

00:24:39But it does matter if you're going to do any day trading or shorter duration moves.

00:24:44Now, moving on to minimum investment requirements.

00:24:47So generally, an ETF will have a lower minimum investment requirement when you compare it to an index fund.

00:24:53So for example, you can buy as little as a single share of an ETF.

00:24:57In some cases, you can even buy fractional shares of an ETF.

00:25:02But with some index funds, they're going to impose a minimum requirement.

00:25:07It could be $1,000, it could be $2,000 or even more.

00:25:10Now, when it comes to expenses and fees, both index funds and ETFs are low cost investments.

00:25:16That's because both are passively managed.

00:25:20Previously, ETFs were known to carry lower expense ratios compared to index funds.

00:25:25But that gap has been closing.

00:25:28And the expenses for index funds and ETFs are now quite similar.

00:25:32So you're going to see expense ratios in the 0.05% to 0.02% range,

00:25:37which is a fraction of 1%, which is a very low cost solution.

00:25:43And of course, we have to consider taxation.

00:25:47ETFs are more tax efficient compared to index funds.

00:25:50That's because of their structuring.

00:25:52So I previously demonstrated to you how they're structured.

00:25:55And that structuring, it has tax consequences.

00:25:59So essentially, with an ETF, you're selling to another buyer,

00:26:02and the cash comes directly from that buyer.

00:26:06To cash out of an index fund, you have to redeem it from the fund manager.

00:26:10And the fund manager will have to sell some of the holdings to get the cash to pay you out.

00:26:16So if there is a gain on the sale, that gain is passed on to all investors of the fund.

00:26:23That means that you can end up with a tax bill, even if you don't sell a single share.

00:26:28So ultimately, assets are bought and sold every time an investor enters or leaves an index fund.

00:26:34And anytime there's a capital gain,

00:26:36every investor that's part of the fund will need to pay capital gains tax.

00:26:41Now, I want to be very clear with you on this topic of taxation,

00:26:44because I don't want this to scare you.

00:26:46So this is going to be in relation to how much money that you have in the index fund.

00:26:50So if you have very little money in the fund, then don't expect the tax consequences to be

00:26:56significant. But if you do have a lot of money in the index fund, then yes,

00:27:00it could be a decent amount. Now, let me give you my opinion on which one is better,

00:27:04an index fund or an ETF. But I want to tell you this story to help you understand the situation,

00:27:10the whole situation. So the index fund was created in 1975 by John Bogle, who went by the name of

00:27:16Jack.

00:27:16So Jack Bogle was the founder of the Vanguard Group. Bogle created the index fund in 1975 so that

00:27:23everyday investors could compete with the pros. So that was 1975. It took a few years for index fund

00:27:31investing to catch on, but eventually it gained traction. So 18 years passed by, it's 1993.

00:27:38State Street Global launches the S&P 500 ETF called the SPDR. It's referred to as the Spider.

00:27:45But this wasn't the first ETF. This was preceded by the Toronto ETF in 1990, among others. But ultimately,

00:27:53the ETF is an improvement of an index fund. It's like an index fund 2.0. And that's why ETFs

00:28:00have been

00:28:00gaining in popularity very quickly. 1993, the ETF market basically didn't exist. 2002, there are

00:28:09over 100 ETFs. 2009, over 1000 ETFs. Currently, we're close to 10,000. And right now, there's a

00:28:19competition for your money between index funds and ETFs. Now, let me tell you what I think. My opinion is

00:28:26that an ETF is an upgraded version of an index fund. And here's why. If you're on a tighter budget,

00:28:34an ETF may be better for you if you have less money to invest upfront. So I'm referring to the

00:28:40higher

00:28:41minimum requirements. So ETFs, yes, they do have a better tax structuring, and that's going to give you

00:28:48greater control of claiming gains or losses. And because you can sell, so you can buy or sell an ETF

00:28:55throughout the day. So if that need ever arose, I'm guessing in most situations that it would not.

00:29:00But if it ever did, that you could take advantage of that situation of any major price movements

00:29:06throughout the day. And that is a benefit that you cannot have or do with an index fund. However,

00:29:13some of these ETF advantages, they might not make a meaningful difference to you, especially if you're

00:29:18a long term investor. So I want to be clear that I do like index funds, but if I had

00:29:23to choose,

00:29:23then I would go with an ETF. But that is just my opinion. But if there's a particular index fund

00:29:30that does not have a competing ETF, then yeah, I would buy that index fund. So that's just the way

00:29:37I

00:29:37see it. So to be clear, both index funds and ETFs have my stamp of approval. However, personally,

00:29:45I like to pick my own stocks in addition to index funds and ETFs. Now, if you want to pick

00:29:52your own

00:29:52stocks, then it is essential that you understand the terminology and you know how to read stocks.

00:29:58Because if you don't understand the stock terms, then you're going to be lost. And you're not going

00:30:03to be able to distinguish good stocks from bad stocks. So let's begin with the essentials.

00:30:09So in this next segment, you're going to learn the key data and stats when you're researching a stock.

00:30:15And it doesn't matter if you're looking at a stock screen on your app or a brokerage account or a

00:30:21website. So the information and terminology that I'm about to show you, it's going to be the same,

00:30:26no matter where you look. So please follow along and make sure that you fully grasp this info,

00:30:31because it'll be critical. We're going to look at finance.yahoo.com. So let's go over there.

00:30:44Once you arrive here at this top bar search bar right here, that's where you're going to put in

00:30:51your ticker symbol. That's your identifying letters of your stock. So let's look at Ally Bank.

00:31:01So Ally Bank is owned by Ally Financial. So let's go there. A-L-L-Y. That's the ticker symbol,

00:31:06as you can see right here. We're going to select that.

00:31:12What we're going to do in this tutorial is give you the basic overview of what we are seeing on

00:31:21this

00:31:21screen. Let's begin. As of right now, when we are reviewing Ally Financial, ticker symbol,

00:31:30A-L-L-Y. The price is $18.43 a share. The market is closed. So this right here,

00:31:41this will not be, this will not be fluctuating because the market is closed.

00:31:46If the market is open during that time, you will see this fluctuating.

00:31:50You know, every few seconds, if you refresh it, it'll fluctuate.

00:31:55During this day, during the, during this trading day, it went up 99 cents.

00:32:02Therefore, it was up 5.68%. That's a pretty big gain.

00:32:08However, markets are very volatile these days.

00:32:12That's what you are reading. After hours, the stock market has closed.

00:32:19However, the stock will still be trading after the market closes and also tomorrow,

00:32:28pre-market. That just means the stock will be trading before the market opens.

00:32:33The amount, the quantity of how much of these stocks or these shares will be trading,

00:32:39it's going to be very minimal compared to the shares of the stock that are traded on the market

00:32:46during the day. So there's going to be, in other words, in layman's terms, there's going to be a

00:32:50lot of buying and selling, a lot of buying and selling, buying and selling during the day.

00:32:53And there's still going to be a little bit of buying and selling after the market closes

00:32:57and before the market opens. Currently, it's after hours. The next day, tomorrow morning,

00:33:06before the market opens, you'll see this say pre-markets. So before, before the market opens.

00:33:12Let's go on to here. This is the meat of the data. What I've highlighted, that's what we're going to

00:33:18be looking at closely. Today, Ally Financial closed at $18.43. The day prior, the previous close

00:33:29of Ally Financial was $17.44.

00:33:35This morning, today, the stock price opened at $17.90. So yesterday, it closed at $17.44 right here.

00:33:47And then at today's open, it just jumped open and started the day off at $17.90. So it was

00:33:55a good

00:33:55start. It was a good morning for Ally Financial. This is your beginner's tutorial. So we are not going to

00:34:02cover what the bid and the ask are. The bid and the ask, just for your information, this is more

00:34:07intermediate level, is what people are willing to pay for it. And ask is the price at which they are

00:34:12willing to sell it at, a share. But again, for now, if you're a beginner, please ignore those.

00:34:19The day's range is the price fluctuation of the day. During the day, during today's trading day,

00:34:29it fluctuated from $17.41 all the way up to $18.55. The 52-week range, that just shows you

00:34:40the price,

00:34:41where the price of Ally Financial has been in the past year. It has been as low as $10.22

00:34:49and as high

00:34:50as $35.42. So you can see the current price, the $18.43. You know, it's not near the lowest

00:35:00and it's not

00:35:01near the highest point during the 52-week range. The volume, volume is very important. This shows how

00:35:12many shares of Ally Financial has traded this day. This shows that 6,994,221 shares have traded today.

00:35:29If you see a stock with a volume that's very low, that means that you can get trapped in that

00:35:38stock

00:35:39because you wouldn't be able to sell it. So if you see a stock with a volume close to zero,

00:35:45that should be a red flag and that should be problematic because even if the stock went up

00:35:51and you wanted to sell it, you probably couldn't get rid of it. However, if I'm looking at Ally Financial

00:35:57and I see that the volume is nearly seven million shares and one share is $18.43,

00:36:06that means it's very liquid. In other words, in layman's terms, that just means that it's very

00:36:12easy for you to buy a share of Ally and it's very easy for you to sell a share of

00:36:17Ally because nearly

00:36:197 million shares trade hands each day. Well, that was today. The average volume is how many shares

00:36:28of this stock trade on average per day. So as you can see, today's volume was slightly less than the

00:36:35average. However, I mean, that's very easy for you to sell your position and get out very quickly

00:36:42because a lot of shares are trading each day. Moving up here, market cap. It's going to say

00:36:516.877B. That means the company, the market cap means market capitalization, which means the value of

00:37:00the company. The value of the company is how many shares there are of that company multiplied

00:37:10by the price per share. So how many shares there are times the price per share will give you the

00:37:15market cap, which means the value of the company. 6.877B just means the market cap or the company's

00:37:22value is valued at 6.877B. If you saw this as an M instead of a B, then that would

00:37:34mean 6.877M.

00:37:36But this is a B. So the market cap, the value of the company is 6.877B. Beta, this is

00:37:46an intermediate

00:37:46level terminology or item. So please ignore this for the time being. This is PE ratio is a price

00:37:54to earnings ratio. This is more intermediate level as well. This just means the price of the stock

00:38:00divided by how much in earnings each share of the stock means. Again, this is more for intermediate

00:38:07level analysis. We're just going over the very basics during this tutorial. However, that's PE ratio

00:38:16and we'll cover that. We look on this very heavily in the intermediate level, so we'll be covering this

00:38:22very thoroughly. Earnings per share, this is intermediate level stuff too. This just means

00:38:30how much in net income the company makes divided by how many shares there are. So it's the earnings,

00:38:36the earnings per share. The earnings dates, this is expected dates where the company will release

00:38:48their quarterly earnings. So it is expected. Today's date is June 1st and we are expecting

00:38:57the earnings to be released between July 16th through July 20th.

00:39:06There's forward dividend and yield. This just means the dividend that a company is paying. So

00:39:174.14%. Not all stocks, not all companies pay dividends. Ally Financial is one example of a

00:39:28company or a stock that pays a dividend. This just means that if you bought $100 worth of Ally Financial

00:39:36stock, then you would receive in dividends a rate of 4.14%. So if you bought $100 worth of Ally

00:39:46Financial stock,

00:39:47you would receive in dividends $4.14 approximately. Ex-dividend date, this just means the date that

00:39:56you need to be, this is more of an intermediate level thing because this is representative of the

00:40:03date that you need to have been in the stock for the dividends for you to receive the dividends.

00:40:11This is one-year target estimate. Honestly, you should do your own research and your own homework. Don't rely

00:40:21on other people's targets or estimates, especially from a generic site like a Yahoo Finance. All this

00:40:26other stuff is this concrete data. But these things where their opinions or estimates, I wouldn't rely on a

00:40:34site like Yahoo or Google or just any generic. Again, this is just opinion. So do your own research.

00:40:43And again, this is not beginner level stuff.

00:40:47But we'll make videos on those topics. Here you're going to see the news regarding the company. This is

00:40:54particularly important if there's large price fluctuations

00:40:59in the stock. Then you can see why the stock moved up so much or why the stock moved down

00:41:04so much.

00:41:05So you can check your news here. Watch out for the ads though.

00:41:11And it just goes on and on. Clickbait right here.

00:41:20That is the news section. And this section is very important too, of course. This is the chart.

00:41:251D. That just means the one-day chart. This is the price movement

00:41:29of Ally Financial during the one-day. The x-axis. Am I saying that right? Y-axis.

00:41:39X-axis. It just sounds funny. Okay. This is showing the time of the day. And this is the y

00:41:44-axis is showing

00:41:45the price. You can switch the time frame to five days to see how the price fluctuates.

00:41:551M is one month. 6M is six months. See, you see the price has dropped considerably from February 18th,

00:42:03February 14th, down to the second or third week of March. I would see the news during that time frame

00:42:13to see what the heck happened. What triggered this? Was it overblown? Was it justified? Or was it,

00:42:19or do you think that it can go down more? So I would check the news to see what happened

00:42:23during

00:42:23this time frame. That's why it's good to look at the charts as well. YTD just means year to date.

00:42:32So this will start January 1st. January 2nd was the first trading day of the year up until today.

00:42:391Y is the one-year chart. It was pretty stable and then it just took a real big dive.

00:42:47Early February. 5Y is the five-year chart. Click on the max. It'll take you back as far as it

00:42:54goes.

00:42:54You can do a full-screen approach.

00:43:01Wow, that's one heck of a dive. Look at that. That went down really fast.

00:43:09We'll go back. Hit the back button over here.

00:43:15You're going to see some features here that are locked. Like the company outlook. I think you got

00:43:19to pay for. You got a freemium, huh? It's not worth it. Probably not worth it.

00:43:28You got the charts. We were just there. I would ignore the conversations. Let's see what this is all about.

00:43:36Don't trust anybody on the conversations on Yahoo's message board. Just don't. Just trust me.

00:43:43Statistics.

00:43:46This is your more intermediate analysis. So we'll ignore that for now.

00:43:52You have the historical price closings. What the stock price was on a particular day.

00:43:57If you're interested in a particular day. Or from a set time frame.

00:44:03The profile will just give you a little bit more information about the company.

00:44:10Some nice paydays. Give you the executives. Titles.

00:44:14Pay. I really like to look at who the executive team is. Because the leadership is key.

00:44:19And you can do your background or your research on these people.

00:44:24Give you the size of the company. Sector industry. The website. And all the basic information.

00:44:29More info here.

00:44:32Okay. This one's probably one of the more important segments.

00:44:37The financials. Here you can look at the income statement. The balance sheet. And the cash flow

00:44:42statement. So you can see how they are financially.

00:44:46If you look at the income sheet. Again. We'll do a separate video about reviewing the income sheet.

00:44:52And the balance sheet. And the cash flow statements.

00:44:55I'm sorry to be going all over the place. Let's go back to income statement. And relax here for a

00:45:00bit.

00:45:02Generally. High level overview. You can see the history. This is their

00:45:06one year figure. One year figures. From 2016, 2017, 2018, 2019. So this is comparative.

00:45:14Each line. Each row. Is a comparative analysis. Compared to the previous year.

00:45:21And what I would do. Again. This is very high level overview. Just see if their total sales.

00:45:27Are growing. Which is their total revenue. See if their total profits. Are growing. Or decreasing.

00:45:32Which is their net income. So that's how you would just look at their financial health.

00:45:37From a very high level overview.

00:45:44And then you can do the same thing. From their balance sheets.

00:45:48You know. You can see their assets. Their liabilities. Are their assets growing.

00:45:51Are their liabilities growing. Just see the health of their company.

00:45:55And you can do the same thing with the cash flow statements.

00:45:58On the analysis tab. Again. Don't trust these people. I mean.

00:46:05They're like. These analysts are like. Weather. Weather men. It's just like weather reporters.

00:46:11Where they just get it wrong all the time. Just don't listen to this. Do your own research.

00:46:16Number of analysts. Just look at this. This is just nonsense.

00:46:20Nonsense. This is just nonsense. We won't get into options.

00:46:27Again. That's more advanced. Holders. Well. This is more intermediate stuff.

00:46:33That a beginner probably would not need to know. This is just showing you the top.

00:46:37Insta. Who. Is holding.

00:46:41These shares. Of this stock.

00:46:44People want to know this stuff. To see if there's smart money.

00:46:47Money. Which is. You know. Big institutions.

00:46:49Or big. Big time investors.

00:46:51That are shareholders.

00:46:53Because usually. That's a signal.

00:46:54Of a vote of a vote of confidence.

00:46:57In that particular company.

00:46:58Depending on who the investor.

00:46:59Who the institutional holder is.

00:47:05And this is. I mean. You don't need to.

00:47:07This is. This is not practical information.

00:47:10Sustainability.

00:47:11So that is a typical information.

00:47:13That you're going to see.

00:47:14When you look up a stock.

00:47:16In addition.

00:47:17It's very important.

00:47:18That you know.

00:47:19The common.

00:47:20Stock market terms.

00:47:21That you'll hear very often.

00:47:24So in this segment.

00:47:25I want to explain to you.

00:47:2610 common terms.

00:47:28That every beginner.

00:47:29In the stock market.

00:47:30Should know.

00:47:31So I'm going to teach you.

00:47:32The lingo.

00:47:33And some key concepts.

00:47:35Starting off.

00:47:36With number one.

00:47:37Is a bull market.

00:47:38When the stock market.

00:47:39Is going up.

00:47:40People call it a bull market.

00:47:42That's because a bull.

00:47:43Thrusts its horns.

00:47:45In an upward motion.

00:47:47In a bull market.

00:47:48There's going to be ups and downs.

00:47:49Along the way.

00:47:50But the general direction.

00:47:51Of a bull market.

00:47:52Is up.

00:47:53A bull market.

00:47:54Can last for a few months.

00:47:56Or for many years.

00:47:57The average bull market.

00:47:59Lasts for three to four years.

00:48:01During a bull market.

00:48:02Most investors.

00:48:03Are making money.

00:48:04That's because on average.

00:48:06Stocks gain.

00:48:07One hundred and ten percent.

00:48:09During a bull market.

00:48:09A bull market.

00:48:11Is good times.

00:48:12And that's why people love it.

00:48:14Everyday investors.

00:48:15Enjoy watching.

00:48:16Their account values go up.

00:48:17And it's a great time.

00:48:18All around.

00:48:19A bull market.

00:48:20Can be triggered.

00:48:21By various factors.

00:48:23Such as a booming economy.

00:48:24Or quantitative easing.

00:48:27Number two.

00:48:27Is quantitative easing.

00:48:29Also abbreviated as QE.

00:48:32This is when the federal reserve.

00:48:33Is printing money.

00:48:34Which causes inflation.

00:48:36When you have high inflation.

00:48:37Most things will go up.

00:48:39In price.

00:48:40Including stocks.

00:48:41In the stock markets.

00:48:43So stock prices.

00:48:44Tend to go up.

00:48:45During quantitative easing.

00:48:47That's just because.

00:48:48There's simply more money.

00:48:49In the economy.

00:48:50All that newly printed money.

00:48:52It needs to go somewhere.

00:48:53And a lot of that money.

00:48:55Finds its way.

00:48:55Into the stock market.

00:48:56Driving up the price of stocks.

00:48:58Number three.

00:48:59Is a bear markets.

00:49:01When the stock market.

00:49:02Is going down.

00:49:03People call it a bear markets.

00:49:05That's because a bear.

00:49:06Swipes its claws.

00:49:07In a downward motion.

00:49:09People use the term.

00:49:10Bear market.

00:49:11When the stock market.

00:49:12Has fallen.

00:49:12At least 20% from its peak.

00:49:15The average bear market.

00:49:16Lasts for nine months.

00:49:19On average.

00:49:20You can expect the stock market.

00:49:21To fall by 36%.

00:49:23Therefore.

00:49:24You can understand.

00:49:25Why most investors.

00:49:26Do not enjoy a bear market.

00:49:29Number four.

00:49:30Shorting.

00:49:31When the stock market.

00:49:32Is going down.

00:49:33Not everyone.

00:49:33Is going to be sad though.

00:49:34Because in the stock market.

00:49:36You can make money.

00:49:37By betting.

00:49:38That stocks.

00:49:39Will fall in price.

00:49:41In the stock market.

00:49:42Most investors.

00:49:43Make money.

00:49:43By buying a stock.

00:49:44At a low price.

00:49:45And then selling it.

00:49:46At a higher price.

00:49:47You buy low.

00:49:49And you sell high.

00:49:50However.

00:49:51You can switch.

00:49:52The order around.

00:49:53You can sell high.

00:49:54And then buy low.

00:49:56You're doing the same thing.

00:49:57Just in the reverse order.

00:50:00Therefore.

00:50:00When you're shorting a stock.

00:50:01You're hoping that the stock.

00:50:03Goes down in price.

00:50:05If you want to make money.

00:50:06Shorting a stock.

00:50:07Then you should be searching.

00:50:08For companies.

00:50:08That have a very bad future.

00:50:10Ahead of them.

00:50:11This could be bad management.

00:50:12A dying industry.

00:50:14A product or service.

00:50:15That was just a fad.

00:50:17Too much debt.

00:50:18Competitors.

00:50:19That are out competing them.

00:50:20Etc.

00:50:21When you're looking to short a stock.

00:50:23You want to make sure.

00:50:24That they're as bad as they come.

00:50:26The more terrible.

00:50:27The better.

00:50:28Number five.

00:50:29Quantitative tightening.

00:50:30We spoke about how quantitative easing.

00:50:33Is money printing.

00:50:34Quantitative tightening.

00:50:36Is the very opposite of that.

00:50:38When the Federal Reserve prints money.

00:50:40That's quantitative easing.

00:50:42When the Federal Reserve takes that money back.

00:50:45That's quantitative tightening.

00:50:47Quantitative tightening.

00:50:48Tends to be harmful to the stock markets.

00:50:51If the Federal Reserve is pulling money out of the economy.

00:50:54There's going to be less money to go around.

00:50:56If there's less money to go around.

00:50:58There's going to be less money in the stock markets.

00:51:01This means that the price of stocks.

00:51:03Will generally go down.

00:51:05So it's pretty straightforward.

00:51:07Quantitative easing.

00:51:08Pushes the stock market up.

00:51:10Quantitative tightening.

00:51:11Pushes the stock market down.

00:51:13At number six.

00:51:14We have dead cat bounce.

00:51:15When the stock market is going down.

00:51:17It's not going to go straight down.

00:51:19It's going to go up and down.

00:51:21Up and down.

00:51:21But the general direction is downward.

00:51:24In this downward trend.

00:51:26You may see stocks bounce in price.

00:51:29Only to fall down even further.

00:51:31A lot of amateur investors lose money in a dead cat bounce.

00:51:35Because they think that a stock has reached a bottom at this point.

00:51:39They see the stock price going back up.

00:51:41And they FOMO.

00:51:43They have the fear of missing out.

00:51:45However, that was not the bottom.

00:51:46And this bounce will be short lived.

00:51:49This bounce in price.

00:51:51It's something that always happens.

00:51:52Because nothing will ever go straight down.

00:51:55It's like a law of physics in the stock market.

00:51:58Even stocks that announce that they're going bankrupt.

00:52:01Will have a dead cat bounce.

00:52:03They call it a dead cat bounce.

00:52:05Because when a cat jumps out of a tall structure.

00:52:07Let's just say a tree.

00:52:08The cat hits the pavement.

00:52:10It dies on impact.

00:52:11It still bounces up.

00:52:13Because of physics.

00:52:14Newton's third law of motion.

00:52:15But the dead cat that bounced up.

00:52:18It's coming right back down.

00:52:20When a stock is going down.

00:52:22It may bounce back up.

00:52:24Investors may think that the stock is coming back to life.

00:52:27And it's going to shoot back up.

00:52:28But no.

00:52:29It's going right back down.

00:52:31That's a dead cat bounce.

00:52:33Number seven.

00:52:34Don't fight the Fed.

00:52:35The Federal Reserve's monetary policy is a big factor.

00:52:39On whether the stock market goes up or down.

00:52:42If the Fed prints money.

00:52:44It pushes the stock market up.

00:52:46If the Fed takes that money back.

00:52:48It pushes the stock market down.

00:52:50Of course it depends on how much money they're printing or taking back.

00:52:54The bigger the quantity.

00:52:56The bigger the impact.

00:52:57The Federal Reserve's decisions.

00:52:59Have a big influence on the direction of the stock market.

00:53:02The Federal Reserve can have more of an impact on the stock market.

00:53:06Than the health of the economy.

00:53:08This was clearly evidence in 2020.

00:53:11During 2020.

00:53:12The economy locked down.

00:53:14Unemployment skyrocketed.

00:53:16And GDP fell.

00:53:18However.

00:53:18The Federal Reserve printed an excessive amount of money.

00:53:22And has sent the stock market up 18%.

00:53:24So that's how powerful the Federal Reserve's influence is on the stock market.

00:53:29Therefore.

00:53:30You don't fight the Fed.

00:53:32Number 8.

00:53:33Dollar Cost Averaging.

00:53:34You'll see investors abbreviating this as DCA.

00:53:37When you buy a stock.

00:53:38You never want to go all in.

00:53:41So let's just say that a stock is at $10.

00:53:44And you think it's a good price.

00:53:46Don't act like a crazy person.

00:53:48And use all of your money to buy it at $10.

00:53:50Even if you think it's a good price.

00:53:52So sure.

00:53:53You can buy some at $10.

00:53:55But save some money.

00:53:56In case it drops to $9.

00:53:58And save some money.

00:53:59In case it drops to $8.

00:54:01By doing so.

00:54:02You'll be averaging down on your purchase price.

00:54:05In this example.

00:54:06Let's just say that you thought it was a good price.

00:54:08At $10.

00:54:09And let's say that nothing has fundamentally changed with the stock.

00:54:12And on no news.

00:54:14The stock falls to $9.

00:54:16So this would be a great opportunity to DCA.

00:54:19Dollar Cost Average Down.

00:54:21And buy more shares at a cheaper price.

00:54:23A benefit of Dollar Cost Averaging is.

00:54:26If you buy some at $10.

00:54:27And then it goes up.

00:54:29Then you'll make money.

00:54:30If the stock goes down.

00:54:32Then you can buy more shares at a cheaper price.

00:54:34And this will allow you to make even more money.

00:54:37Because you got in at a better price.

00:54:39Number 9.

00:54:40Tax Loss Harvesting.

00:54:42This is when you're selling your losing stocks.

00:54:45Taking the loss.

00:54:46So that you pay less taxes.

00:54:48So let's say that you bought and sold a bunch of stocks.

00:54:51During the year.

00:54:51And you're up $5,000.

00:54:54In that case.

00:54:55Congratulations on your success.

00:54:57However.

00:54:57You're going to face taxes.

00:54:59However.

00:55:00If you're holding on to some stocks that went down in value.

00:55:03You can sell them at a loss.

00:55:05So your total gains are reduced.

00:55:08By tax loss harvesting.

00:55:10You end up paying less in taxes.

00:55:12Number 10.

00:55:13Support and resistance.

00:55:15These are very important terms that you're going to hear often.

00:55:18A lot of people in the stock market.

00:55:19Like to look at the stock charts.

00:55:21And identify patterns.

00:55:23If there's a certain price.

00:55:25That a stock has a hard time falling below.

00:55:28That's called the support.

00:55:30If there's a certain price.

00:55:31That a stock has a hard time going above.

00:55:34That's called the resistance.

00:55:36In a lot of cases.

00:55:37When the support is broken.

00:55:39It will turn into the new resistance.

00:55:41And a lot of times.

00:55:42When the resistance is broken.

00:55:44It will turn into the new support.

00:55:46Now let me tell you.

00:55:48How to find good stocks to buy.

00:55:51So it's a simple two-step process.

00:55:53Step one is discovery.

00:55:56So how do you even find companies that are listed on the stock markets?

00:56:01And step two is your evaluation.

00:56:03So that's researching whether a stock is a good buy or not.

00:56:07So let's talk about step number one.

00:56:10Which is finding stocks.

00:56:12First.

00:56:13You have to find out which companies are listed on the stock market.

00:56:17Right?

00:56:17So how do you do that?

00:56:19And the answer is simple.

00:56:20There are multiple ways.

00:56:22So here's one way.

00:56:23There are many free websites.

00:56:25That list all the companies.

00:56:27That are on the stock markets.

00:56:29And you can filter your search.

00:56:31For which stocks.

00:56:32That you want to look at.

00:56:33Based on.

00:56:34The size of the company.

00:56:36The price of the stock.

00:56:37By industry.

00:56:39Stocks that are trending up.

00:56:40Stocks that are trending down.

00:56:42How popular stock is.

00:56:44Etc.

00:56:44So that's one method.

00:56:46Another method is that you can find stocks.

00:56:48By reading financial news outlets.

00:56:50So we're talking about Wall Street Journal.

00:56:52Google Finance.

00:56:53Yahoo Finance.

00:56:54Etc.

00:56:55Another method is that you can subscribe.

00:56:58To free newsletters about stock picking.

00:57:01There are subscription services for stock picking.

00:57:04You can always ask your friends.

00:57:06Your family members or coworkers.

00:57:08Now step number two.

00:57:10Which is very important.

00:57:11Is doing your research.

00:57:13Do your due diligence.

00:57:15Before investing your hard earned money.

00:57:18Into the stock.

00:57:19Because your money is on the line.

00:57:20You want to make sure that you do your homework.

00:57:23To maximize your odds.

00:57:24That you pick a winner.

00:57:26If you get stock recommendations.

00:57:28From a newsletter.

00:57:29A subscription service.

00:57:31A friend.

00:57:31A family member.

00:57:32Or coworker.

00:57:33It doesn't matter where it comes from.

00:57:35Always.

00:57:36Do your own research.

00:57:38And I want to tell you this.

00:57:39There is no one right way.

00:57:41To evaluate a stock.

00:57:43Some investors.

00:57:45Will pay more attention.

00:57:46To sales growth.

00:57:47Others.

00:57:48To profits.

00:57:49Or dividends.

00:57:50Price to earnings ratio.

00:57:51Cash flow.

00:57:52The charts.

00:57:53Etc.

00:57:54Your evaluation.

00:57:56Will most likely encompass.

00:57:57A variety.

00:57:58Of these factors.

00:57:59So everyone has their own style.

00:58:01Of stock picking.

00:58:02Now let me give you my honest opinion.

00:58:04About where you should buy.

00:58:06And sell stocks.

00:58:08So a brokerage account.

00:58:09Is where you buy.

00:58:10And sell stocks.

00:58:12And the majority of brokerage accounts.

00:58:14Have zero commissions.

00:58:16So that means that it costs you nothing.

00:58:18To buy a stock.

00:58:19Or to sell a stock.

00:58:20So they don't charge you anything.

00:58:21It's literally free.

00:58:23That's because these brokerages.

00:58:24Have other ways of making money.

00:58:26They make money from lending.

00:58:27From interest.

00:58:28From market making.

00:58:30So they make money in a lot of ways.

00:58:32Not limited to just those.

00:58:34So they don't even bother.

00:58:35Charging you a commission.

00:58:37To buy or sell stocks.

00:58:38So the question is.

00:58:40Which brokerage accounts.

00:58:41Is the best.

00:58:42Where should you open up.

00:58:44A stock market accounts.

00:58:46My honest answer is.

00:58:48They're all the same.

00:58:50Now of course.

00:58:50There's going to be exceptions.

00:58:51Like if you're a professional day trader.

00:58:54But for the vast majority of investors.

00:58:57It doesn't matter.

00:58:57If you have a million dollars.

00:58:58Or a hundred dollars.

00:59:00Any name brand brokerage accounts.

00:59:02Will be good.

00:59:03So I'm going to leave a link for you.

00:59:05Down below.

00:59:06Of a good brokerage account.

00:59:07That I use personally.

00:59:09If you use that link.

00:59:11Then you'll receive a sign up bonus.

00:59:12Of free stocks.

00:59:14To kick start your accounts.

00:59:16Now moving on.

00:59:17To stock market taxes.

00:59:18This is very important.

00:59:20For two reasons.

00:59:21So the first reason is.

00:59:23Well you don't want to get in trouble.

00:59:24At the IRS.

00:59:25And the second reason is.

00:59:26That you want to minimize your taxes.

00:59:29On your stock market gains.

00:59:31So I'm going to teach you.

00:59:32What you have to do.

00:59:33With the money that you make.

00:59:35In the stock markets.

00:59:36Money that you lose.

00:59:37In the stock markets.

00:59:38Your dividend income.

00:59:40Your interest income.

00:59:41And how to reduce your taxes.

00:59:43In the stock markets.

00:59:45If you have more advanced questions.

00:59:46Or if you just need clarification.

00:59:48On what we covered today.

00:59:50Then please write them.

00:59:50In the comments down below.

00:59:52And I will do my best.

00:59:53To help you out.

00:59:55So let's start with the basics.

00:59:57In the stock market.

00:59:58Your taxes.

00:59:58Will be based off.

00:59:59The calendar year.

01:00:00So we're talking about.

01:00:01January 1st.

01:00:02To December 31st.

01:00:04Your brokerage account.

01:00:05Will keep track.

01:00:06Of all your activity.

01:00:07For the year.

01:00:08And this is going to include.

01:00:09Gains.

01:00:10Losses.

01:00:11Interest.

01:00:11Dividends.

01:00:12Etc.

01:00:13Now.

01:00:14I want you to be prepared.

01:00:15So I want to give you a timeline.

01:00:17Of the events.

01:00:18So that you don't miss.

01:00:19Any important tax.

01:00:20Deadlines.

01:00:21Or documents.

01:00:22So let's say.

01:00:23That it's December 31st.

01:00:25It's the last day of the year.

01:00:26And then the day ends.

01:00:28And then the year.

01:00:29Just ended.

01:00:30So happy new year.

01:00:32It's now January 1st.

01:00:34And your brokerage account.

01:00:34Has until February 15th.

01:00:36To give you a tax document.

01:00:38That you need to report.

01:00:40On your tax return.

01:00:42This tax document.

01:00:43Is called the consolidated.

01:00:441099.

01:00:46The consolidated 1099.

01:00:48Will include.

01:00:48The 1099.

01:00:49B.

01:00:50Which states.

01:00:51How much money.

01:00:52That you made or lost.

01:00:53In the stock market.

01:00:54That year.

01:00:55The 1099.

01:00:56INT.

01:00:58And that states.

01:00:59How much interest income.

01:01:00That you earned that year.

01:01:02In your brokerage accounts.

01:01:03And the 1099.

01:01:04Div.

01:01:05Which states.

01:01:06How much dividend income.

01:01:08That you earned that year.

01:01:09In your brokerage accounts.

01:01:11Now.

01:01:11You would think.

01:01:12That in this day and age.

01:01:14Everything is computerized.

01:01:15Right?

01:01:16So why can't your brokerage accounts.

01:01:18Immediately generate your tax documents.

01:01:20On January 1st.

01:01:22Like what's up with that?

01:01:23So that's a good question.

01:01:24But there's actually.

01:01:26A good reason.

01:01:26Why it cannot be done.

01:01:28That quickly.

01:01:29It's because.

01:01:30Even though your tax period.

01:01:31Ends on December 31st.

01:01:33There are certain types.

01:01:34Of stock transactions.

01:01:36That can retroactively.

01:01:38Affect your taxes.

01:01:39So for example.

01:01:40Let's say that the year 2023.

01:01:42Ended.

01:01:43And it's January 22nd.

01:01:45Of 2024.

01:01:47So with certain transactions.

01:01:50What you do in January.

01:01:51Can affect your taxes.

01:01:53In the previous year.

01:01:55One example.

01:01:56Is the wash sale rule.

01:01:58That's why brokerage accounts.

01:02:00Cannot immediately.

01:02:01Generate your tax documents.

01:02:02On January 1st.

01:02:05So you're most likely.

01:02:06Going to get your 1099 tax document.

01:02:08In early to mid February.

01:02:10Which should be enough time.

01:02:12For you to finish your tax return.

01:02:14By the April due dates.

01:02:16So that's an overview.

01:02:17Of how this all works.

01:02:18Now let's go over.

01:02:19The most common situations.

01:02:22In the stock market.

01:02:23You will only pay taxes.

01:02:25If you make money.

01:02:26If you lose money in the stock market.

01:02:28Then you will not pay taxes.

01:02:30So as a matter of fact.

01:02:31If you lose money in the stock market.

01:02:32Then you will receive.

01:02:33A tax deduction.

01:02:35Now let me give you an example.

01:02:37To clarify.

01:02:38So let's just say.

01:02:38That you buy Tesla stock.

01:02:40For $100.

01:02:41In January of 2023.

01:02:43And let's say.

01:02:44That you sell it.

01:02:45One month later.

01:02:46In February of 2023.

01:02:47For $120.

01:02:49So congratulations.

01:02:51You made a gain.

01:02:52Of $20.

01:02:54You sold the stock.

01:02:55For $120.

01:02:57But you will not pay taxes.

01:02:59On the full sales price.

01:03:01Of $120.

01:03:02You will only pay taxes.

01:03:04On your $20 of gain.

01:03:07So how much.

01:03:09Will you pay in taxes?

01:03:11That's going to depend.

01:03:12On which tax brackets.

01:03:14That you're in.

01:03:15And that depends.

01:03:15On how much money.

01:03:16That you make overall.

01:03:18If you're in the 10% tax bracket.

01:03:20Then your $20 of gain.

01:03:21Will be taxed.

01:03:23At a rate of 10%.

01:03:25Which means.

01:03:26That you will owe the IRS.

01:03:28$2.

01:03:29You made a gain.

01:03:31Of $20.

01:03:32You need to pay $2 of taxes.

01:03:34To the IRS.

01:03:35So you came out ahead.

01:03:37By $18.

01:03:38Now here's what you must know.

01:03:40To save yourself a lot.

01:03:41In taxes.

01:03:43If you hold a stock.

01:03:44For one year.

01:03:45Or less.

01:03:46And then you sell it.

01:03:47For a gain.

01:03:48Then you will pay.

01:03:49Regular tax rates.

01:03:50This is called.

01:03:51Short-term capital gains.

01:03:53So it's just based on.

01:03:54How long.

01:03:55You hold the stock.

01:03:57One year or less.

01:03:58Is classified as.

01:04:00Short-term.

01:04:01So if you're in the 10% tax bracket.

01:04:03And you make money in the stock market.

01:04:05Then you will pay a tax rate.

01:04:07Of 10% on your short-term capital gains.

01:04:11If you're in the 37% tax brackets.

01:04:13And you make money in the stock market.

01:04:15Then you will pay a tax rate.

01:04:17Of 37% on your short-term capital gains.

01:04:20But.

01:04:22If you hold the stock.

01:04:24For more than one year.

01:04:25And then you sell it for a gain.

01:04:27Then it will be classified.

01:04:28As a long-term capital gain.

01:04:30So it just depends.

01:04:32On how long.

01:04:33You hold the stock.

01:04:34Short-term.

01:04:35Is a year or less.

01:04:37Long-term.

01:04:38Is longer than a year.

01:04:40So long-term capital gains.

01:04:42Receive much better tax rates.

01:04:44And it doesn't matter.

01:04:45Which tax bracket.

01:04:46That you're in.

01:04:46Your tax treatment.

01:04:48Will be much better.

01:04:49Regardless.

01:04:50It is a game changer.

01:04:51So let me explain.

01:04:53If you make a lot of money.

01:04:55At your job.

01:04:56And you're in the 37% tax brackets.

01:04:58Your long-term capital gains.

01:05:00Will be taxed.

01:05:01Around 20%.

01:05:03If you're in the 25% tax brackets.

01:05:05Your long-term capital gains.

01:05:07Will be taxed at 15%.

01:05:09If you're in the 10% tax brackets.

01:05:12Your long-term capital gains.

01:05:14Will be taxed at a rate.

01:05:15Of 0%.

01:05:16So that's right.

01:05:180%.

01:05:18If you don't believe me.

01:05:20You can look up.

01:05:210% long-term capital gains tax.

01:05:24Therefore.

01:05:25Regardless of.

01:05:26Whichever tax rate.

01:05:27That you're in.

01:05:28Long-term capital gains.

01:05:29Will receive.

01:05:30Favorable tax treatment.

01:05:31So keep that in mind.

01:05:33This is going to save you.

01:05:34A lot of money.

01:05:35Especially.

01:05:35If you're sitting.

01:05:36On a big winner.

01:05:37And this leads.

01:05:38To another important point.

01:05:40That you must know.

01:05:42You only trigger.

01:05:44A tax consequence.

01:05:45When you close your position.

01:05:46So let me explain.

01:05:48So let's just say.

01:05:49That you bought.

01:05:50Microsoft stock.

01:05:52In the year 2020.

01:05:54For $100.

01:05:55By the end of the year.

01:05:56By the end of 2020.

01:05:58The stock goes up.

01:05:59From $100 to $130.

01:06:02But.

01:06:03You didn't sell it.

01:06:04You're just holding on to it.

01:06:06Because.

01:06:07You did not sell the stock.

01:06:08And you did not close your position.

01:06:10You did not trigger.

01:06:12A tax liability.

01:06:13And.

01:06:13Let's say that it's next year.

01:06:15So now we're in 2021.

01:06:16And 2021 ends.

01:06:18And Microsoft went up.

01:06:20To $150.

01:06:21So congratulations.

01:06:23But you just held the stock.

01:06:25You still.

01:06:25Didn't sell it.

01:06:27Then it's going to be the same thing.

01:06:28You did not sell your stock.

01:06:30You did not realize the gain.

01:06:31Which means that a tax consequence.

01:06:34Has not been triggered.

01:06:35So still.

01:06:37There's nothing to report on your tax return.

01:06:39And you don't have to pay any taxes yet.

01:06:41Because you haven't sold the position.

01:06:43You have not closed your position.

01:06:45And then.

01:06:46Let's say that we're now in the year 2022.

01:06:49And you finally decide to sell the stock.

01:06:51For $180.

01:06:53Now I'll tell you two things.

01:06:56One.

01:06:56Your gain is $80.

01:06:59You sell the Microsoft stock.

01:07:01For $180.

01:07:02You bought it.

01:07:03For $100.

01:07:04So your gain.

01:07:05Your gain is $80.

01:07:06And you will be taxed.

01:07:08On your $80 of gain.

01:07:10The second thing.

01:07:11Is that your tax rates.

01:07:12Will be much better.

01:07:14Because remember.

01:07:15You held on to the stock.

01:07:17For longer than one year.

01:07:18And this makes it a long term capital gain.

01:07:21And long term capital gains.

01:07:23Receive much better tax rates.

01:07:25Now let's talk about losing money in the stock market.

01:07:29Because it happens.

01:07:30When you make money in the stock market.

01:07:32You have to pay taxes.

01:07:32When you lose money in the stock market.

01:07:35The IRS gives you a tax deduction.

01:07:38And a tax deduction.

01:07:40Allows you to pay less taxes.

01:07:42Which is a good thing.

01:07:43So let's be clear.

01:07:44Losing money in the stock market is bad.

01:07:46Try not to do that.

01:07:48But if you lose money.

01:07:50At least you get a tax deduction.

01:07:52When life throws lemons at you.

01:07:53You make lemonade.

01:07:55So use this to keep a positive attitude.

01:07:58Towards losing money in the stock market.

01:07:59At least you get a tax break.

01:08:01So let's run through three examples.

01:08:04Of you losing money in the stock markets.

01:08:06Example number one.

01:08:08You work a job.

01:08:09And at your job.

01:08:10You make $100,000 of taxable income.

01:08:13So congrats.

01:08:13You make six figures.

01:08:15You have all this extra money.

01:08:17And you're like.

01:08:18I'm going to invest some money in the stock markets.

01:08:20And you buy $2,000 of Peloton stock.

01:08:23And your investment declines.

01:08:25From $2,000 to $1,000 in the same year.

01:08:29And you don't sell it by the end of the year.

01:08:32You just keep holding on to the stock.

01:08:34Hoping that it recovers.

01:08:36You know what the tax consequence is?

01:08:38There is none.

01:08:39Because remember.

01:08:40You didn't sell the stock.

01:08:41You did not close your position.

01:08:43So you did not realize your loss.

01:08:46Therefore, there is no tax consequence.

01:08:49The tax implications will be triggered.

01:08:51In the year that you sell the stock.

01:08:53For a gain or for a loss.

01:08:56Example number two.

01:08:57It's going to be the same setup.

01:08:58You make $100,000 at your job.

01:09:01You buy $2,000 worth of Peloton stock.

01:09:04It declines to $1,000.

01:09:06And you can't take it anymore.

01:09:08The stock is just stressing you out.

01:09:10And you end up selling it the same year.

01:09:13For a $1,000 loss.

01:09:15In this scenario.

01:09:16You realize the loss of $1,000.

01:09:19But hey.

01:09:20You have to look at the bright side.

01:09:21You get a $1,000 tax deduction.

01:09:23So on your tax return.

01:09:25You make $100,000 of taxable income at your job.

01:09:29But now you get a $1,000 stock market loss.

01:09:32To reduce your total taxable income.

01:09:35So on your tax return.

01:09:37Your taxable income goes from $100,000 to $99,000.

01:09:41So hey.

01:09:42You save some money on your taxes.

01:09:45And example number three.

01:09:47Same setup.

01:09:48You make $100,000 of income at your job.

01:09:51And let's say that you bought $20,000 of Peloton stock.

01:09:55Like you went overboard.

01:09:56Like you YOLOed.

01:09:57And let's just say that the stock fell in value.

01:10:00From $20,000 to $10,000.

01:10:03You know that sucks.

01:10:04But it happens.

01:10:06And you sold the stock.

01:10:07And you lost $10,000.

01:10:10Okay.

01:10:11So here's what happens.

01:10:13There's a rule that limits your losses per year.

01:10:18You can only use a maximum of $3,000 of losses per year as a tax deduction.

01:10:24So if you lost $10,000 this year, you can take a $3,000 tax deduction this year.

01:10:31And then your tax return would look like this.

01:10:35Taxable wage income, $100,000.

01:10:38Capital losses, $3,000.

01:10:41Taxable income, $97,000.

01:10:44And then you would have unused losses of $7,000.

01:10:48So the $7,000 of remaining losses would carry forward into the future.

01:10:53So don't worry.

01:10:54Even though you can't use all of your losses as a tax deduction this year,

01:10:59you can use them in future years.

01:11:02So you don't lose your losses they carry forward.

01:11:06And if you don't use all your losses next year,

01:11:09then the losses just keep carrying forward until you're able to claim them all in full.

01:11:14Now, I have to clarify this.

01:11:16This is so important.

01:11:17Do not be confused.

01:11:19If you lost $10,000 on Peloton stock,

01:11:23but you made $10,000 on Walmart stock,

01:11:27then you can use the entire $10,000 loss from Peloton

01:11:31to offset the $10,000 Walmart gain.

01:11:34So they net together.

01:11:36The $3,000 limitation is when you lost money in the stock market overall.

01:11:42And $3,000 is the maximum tax deduction that you can claim

01:11:46to lower your other taxable income,

01:11:49such as taxable income that you made at your job.

01:11:52So to clarify, if you made a gain of $10,000 on Walmart stock,

01:11:57but you lost $15,000 on Peloton stock,

01:12:01that means that you lost $5,000 in the stock markets.

01:12:06And then you can use $3,000 of that as a tax deduction to reduce your wage income.

01:12:14So you lost $5,000 in the stock market overall.

01:12:17You can use $3,000 as a tax deduction that year.

01:12:22And then your $2,000 of remaining losses will carry forward to next year.

01:12:26Now let's cover your tax obligation on your dividend income and your interest income.

01:12:31So this is very easy, but I don't want you to overlook this.

01:12:34So remember, around early February, you should receive your tax document from your brokerage

01:12:39account. This tax form is called the Consolidated 1099. And this will tell you how much money that

01:12:46you made from interest and dividends for the tax year that just ended. And you have to report this

01:12:52information on your tax return, but it's very easy to do that. If you're filing your tax return

01:12:58yourself with a do it yourself software, then you just simply look at your 1099 tax form and then

01:13:04type into the software, the figures that your software needs. But in today's modern society,

01:13:10many tax software allow you to directly connect to your brokerage accounts and the software will

01:13:15automatically retrieve the relevant tax information that your tax return needs. And just for your

01:13:21information, you may have interest income in your stock market accounts because you may be earning

01:13:27interest on money that you're not using within your accounts. If you get paid interest, it's listed

01:13:33on your 1099 tax documents and you have to report on your tax return, but that's very straightforward to

01:13:40do. Your interest income will be taxed at your regular tax rates. You will not receive any special

01:13:46treatments on your interest income. And here's a little extra information on dividends. So some of your

01:13:52stocks may pay dividends. It's listed on your 1099 tax document and you report it on your tax return.

01:14:00Some of your dividends may be taxed at your regular rates, and these are called ordinary dividends.

01:14:06Some of your dividends may be taxed at lower rates, and these are called qualified dividends.

01:14:12So it just depends on the classification of the dividends. So we're not going to get into that today.

01:14:17On your 1099 tax document, it will separately list out your qualified dividends. But long story short,

01:14:25be on the lookout for your 1099 tax document by mid-February. Use that information for your tax software

01:14:31if you're self-preparing your return. If you're using an accountant, give them the consolidated 1099 tax

01:14:37documents. If you do not report your 1099 activity, it will most likely result in an IRS letter,

01:14:44unless your activity is extremely minimal. Again, this was a beginner's guide to taxes in the stock

01:14:51markets. If you have intermediates or advanced questions, please ask them in the comments down

01:14:57below. I intentionally did not go into the details of estimated tax payments, equity options, commodities,

01:15:04foreign tax credits, etc. So I don't want to scare beginners because those issues will not be

01:15:10applicable to most people. And I want to clarify this. If you invest in stocks or index funds or ETFs

01:15:17or mutual funds in a retirement account, there are no tax consequences until you take that money out of

01:15:25your retirement accounts. So if you buy or sell within a retirement account, those are non-taxable

01:15:30transactions and they will not be reported on your tax return. I hope you learned something and enjoy this

01:15:37video. Thank you so much for the support. Please subscribe and I wish you a very nice day. Happy investing.

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