This year’s stock market mania over the struggling video game retailer Game Stop has provided a teachable moment about the often confusing behavior of financial markets. Before teens try to conquer investing, they need to understand what stocks are, why people invest, and how the markets work. There are plenty of good resources available to help guide the way, like A Beginner’s Guide to Investing from The Stock Dork.
Tim Downey, Outreach Executive with The Stock Dork, had recently emailed us to say, “We’ve been working hard on a brand new article which we consider to be an extensive beginner’s guide to investing which we have just published… It would mean a lot to me if you could help me out with some feedback.” Then the Game Stop story came up, so if the idea of investing intrigues you, this guide couldn’t have come at a better time.
Here’s a summary of what happened with Game Stop. Some hedge funds and other big investors had little faith in the company and “shorted” the stock, basically betting that its share price would fall. A group of individual investors on Reddit decided to see if they could drive up the price by buying in. When a stock is heavily shorted, a rise in its price can force short sellers to get out of their bets. To do that, they have to buy the stock, which pushes the price even higher. As GameStop’s short sellers got squeezed, the small investors encouraged each other to keep the momentum going. As a result, Game Stop’s stock went from trading at only $6.19 a share to a high of $483.
If that sounds exciting, take a look at A Beginner’s Guide to Investing. This guide talks you through the risks and opportunities surrounding investing. The educational introduction includes a definition of investing and a glossary of terms. It describes different types of investments such as stocks, bonds, and mutual funds. The guide lists factors to consider before investing, tells how to get started, and discusses how to analyze potential investments. It covers the topic of risk vs. return, which is an important concept to grasp. Finally, the informative guide says to keep in mind that “it is as important to diversify your learning as it is to diversify your assets.”
Parents should make sure kids understand money basics before they try to conquer investing. But when they’re ready, A Beginner’s Guide to Investing from The Stock Dork is a great place to start. The Stock Dork’s mission is to teach investors about the ins and outs of building real wealth by investing in stocks and other assets. NOTE: While the guide mentions educating yourself with books and courses, we’d also recommend one or more of the many stock market apps and games that allow users to simulate and practice various investing experiences.