Sunday, January 31, 2021

The Short Squeeze

 The Short Squeeze  


The Short Squeeze was all over the news this week. Before this week, if you heard the term 'The Short Squeeze', you would think it had something to do with orange juice. Now we all associate it with hedge funds and those Redditors working the system. 

What most people are failing to see, is that these young people are now learning how the stock market works. They may lose all of their money, however, what they are learning is beyond any book education. This education is hands on, or in the Redditor's talk 'diamond hands' instead of 'paper hands'.

In public education, money, finances, saving, and investing are rarely taught. A student may have an economic class or two, however, those courses do not deal with real life examples. High school students will not relate to some theoretical exercises that they have no way to associate with. 

Hopefully years after 'The Short Squeeze' is but a fading memory, these young people will continue to learn about money. Today, with the internet, any person can learn how to read stock charts and how to look for trends. The most important part for a person that wants to invest, it to just start. At first, you will lose money. That is fine because you are learning. Even if you lose it all, you will learn from your previous errors. 

At first, invest money only that you are willing to lose. Do not use your rent money, food money, car payment money, or any other money that you need. Risk only money that if you lose, you can still pay your bills. Especially at first do not use money that will make you ill at losing. If you drop ten bucks, that is easier than dropping a thousand! 

When a young person learns how to invest, it is like having a superpower. They have money they can access when they need it, have that money grow over time, and will become mindful about spending money foolishly. If they start investing when they are in their early twenties, when they are near retirement, they will have more to make their lives comfortable. Instead of worrying about finances, they have spent time enjoying their lives.

So this 'Short Squeeze' may turn out to be the greatest learning lesson in a generation! Invest in what you understand. Take risk with money you can lose. And think long term. Historically, money invested in the stock market will double every seven to ten years. 

The longer you are in, the more time you will have for that money to double. From age 20 to 70, your money could double five to seven times depending on the interest rate of the market.  If you start with $1000 the first year, the next seven years you would have $2000, then $4000, then $8000, then $16,000, $32,000, $64,000, $128,000! That is the power of investing! 

Computed!

  

No comments:



Blog Archive

Do you Know Herbert Midgley?