Educational articles

Should You Buy More Stock When the Price is Going Down?

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Buying more stock when the price is going down can be a good investment strategy, but it depends on several important factors, including why the stock price is falling, the financial health of the company, and your long-term investment goals. When a stock becomes cheaper, investors have the opportunity to purchase more shares for the same amount of money. However, a falling share price does not automatically mean that the stock is a good investment or that its price will …

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How Government Spending Can Cause Inflation

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Government spending can cause inflation when it increases the total demand for goods and services faster than the economy can increase the supply of those goods and services. To understand this process, it is important to understand how government spending affects the flow of money through the economy, how businesses respond to increases in demand, and why prices tend to rise when an economy’s resources become scarce. Although government spending is an important tool for promoting economic growth, employment, infrastructure …

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Why is the US stock market going up when bond yields are rising?

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The U.S. stock market can rise while bond yields are rising because higher yields are only one part of the equation. Higher Treasury yields normally put pressure on stocks because they increase the discount rate investors use to value future profits. But if investors believe corporate earnings will grow quickly enough, stocks can still rise even while yields move higher. The market is essentially saying that strong earnings growth, particularly from large technology and AI-related companies, is currently more important …

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How Interest Rate Rises Affect the Average Person

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Interest rate rises affect ordinary people because they change the cost of borrowing money and the reward for saving money. When a central bank raises its interest rate, the effects can spread throughout the economy, influencing mortgages, rents, savings, spending, employment, house prices and even government finances. The impact is not the same for everyone. A person with a large mortgage can be affected very differently from someone with substantial savings. However, for many households, especially those carrying significant debt, …

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Reasons People Hold On to a Stock for Too Long

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Holding a stock for a long time isn’t automatically a mistake. Long-term investing often requires tolerating volatility and uncertainty. The problem occurs when someone continues holding because they can’t bring themselves to sell, rather than because the investment still makes sense. Here are the main reasons that happens. They Don’t Want to Admit They Were Wrong This is probably one of the biggest reasons. An investor buys a stock because they believe their analysis is correct. When the stock falls, …

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