Stock Trading Tips, Learn to Talk Percentages

Stock Trading Tip 2

Learn to only talk percentages, not numbers, when speaking of your investment results.

I will say this to you all bluntly, no real trader is going to give 2 craps if you made $10,000 last month, or if you grew your portfolio $50,000 this year. When you talk about your investment portfolio results on Wall Street, you talk only with Stock Lingo.

Use only percentages to illustrate your success. Why? Because otherwise you are coming straight from an infomercial. Ever see those investment infomercials where they have people say things like, “I made $5,000 my first week!” Or “I grew my portfolio $2,000 in one day”. It is all relative to the numbers. If I put $1,000,000 into Apple and it goes up %1 the first day, I just made $10,000. Talk about success stories… a monkey could do that.

So, which sounds better to you:

A. “Hey Bob, I just made $20,000 this month in my investment portfolio”

B. “Hey Bob, I did 15% in this month on my Apple position after Q3 earnings came out stronger than expected.”

The second sentence sounds far more professional and reputable.

Want To Really Sound Good? Do This…

If you really want to sound like you know what you are talking about, compare your quarterly and/or yearly percentage results to the S & P 500.

Did you know that every major hedge fund, institution, mutual fund, etc. compares their yearly results to the growth of the S & P 500? The S & P 500 is THE BENCHMARK to beat each year for professional investors.

It is horribly easy to find out how the S & P 500 is performing for the year:

1. Go to yahoo finance
2. Write down the S & P 500 Close for today (1522.97)
3. Click get the historical price for the close on the last day of the past year (it is 1418.30)
4. Subtract #3 from #2, divide that by #3

You will find the S & P 500 is up 7.38% so far this year.

Challenge Your Broker

Call up your broker and ask him this, “Bob, how is our portfolio doing compared to the S & P 500?” If he says “we are doing great, we are up nearly 5% this year” or any % (if he even gives a %) less than 7.38%, than I have news for you, you are wasting your management fees.

Why? Because you don’t need him. I will explain these more down the road, but there are things called exchange traded funds, or ETFs. What do they do? They are securities that track an index, but trade like a stock. The “SPY” tracks the S & P 500, so to follow the market simply buy shares of SPY and you would be up about 7.38% so far this year.

Can your broker beat that? I sure hope so…

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