Re: Nobody has cracked the code
driven
1/4/2012 10:59:59 AM
It would be nice if high school grads just understood the differences between credit and debit, and why it's better to use one over the other for online purchases. If they knew the basic stuff like that, I'd feel confident they'd pick up investing strategies down the line. But the average person seems afraid of anything related to finances or economics, increasing the odds they he will become a victim of a fraud or scam somewhere along the way.
Re: Nobody has cracked the code
cat tail
1/4/2012 10:30:31 AM
Yes, that's my point Noreen. So many people hear IPO and get all excited -- but they don't even understand what an IPO is or how the odds of profiting from investing in it are low. If they had better economic education -- from childhood into their adult lives -- then they would be better equipped to assess various investments in a logical and rational way.
I think some people today view investing as an extension of gambling: a roll of the dice, a toss of the coin, something that is determined only by luck instead of thought and skill.
Investing is a part of financial literacy. But the concept is much broader -- and equally neglected -- in the US. A 2008 survey sponsored by Merrill Lynch found that less than half of the high school seniors surveyed and just 62% of college students could correctly answer basic economic questions.
The 31-question survey revealed that high school seniors have a lot to learn about important financial concepts. Among the findings in the survey:
- 52% did not know that a credit card holder who only pays the minimum amount on monthly card balances will pay more in annual finance charges than a card holder who pays their balance in full;
- Only 17 percent correctly answered that stocks are likely to yield higher returns than savings bonds, savings accounts and checking accounts over the next 18 years even though there has never been an 18-year period where this wasn't true;
- 60% were unaware they could lose their health insurance if their parents become unemployed.
- Only 36% think a house financed with a fixed-rate mortgage is a good hedge against a sudden increase in inflation, compared with 45% in 2006.
So until students understand basic economic concepts, they won't be very prudent investors.
Re: Nobody has cracked the code
yalanand
1/4/2012 4:16:40 AM
Perhaps that starts with better economic education in high school so the concept of investing becomes more familiar to average people.
@cat tail, Why do you think its necessary to teach the concept of investment to high school students ? I think its better if students concentrate more on their studies rather than get addicted to stock markets, trading etc. Once they start earning they will automatically understand the need for investment.
Re: IPO for long run
yalanand
1/4/2012 4:08:35 AM
Noreen, am from an Asian country and here IPO is only meant for companies having proven track record, both in financial and marker aspect.
@Jacob, are you sure about this ? Atleast in India this is not the case. SEBI which is stock regulator in India does a poor job of scrutinizing the companies which apply for IPO.
Re: IPO for long run
yalanand
1/4/2012 4:04:58 AM
IPOs in the US are often issued by companies that have never made a profit, and have very little historical data to support an investment.
@Noreen, this is the same case in India as well. More than 70% of the 2011 IPO stocks gave negative returns to the investors (some even gave return of -90%). I was big fan of IPO market because you could have made quick bucks, but after 2011 IPO performance I am convinced that IPO market is pretty dangerous place to invest in.
Re: IPO for long run
Jacob
1/3/2012 11:00:39 PM
Noreen, am from an Asian country and here IPO is only meant for companies having proven track record, both in financial and marker aspect. If it's a start up company, they can opt for bonds and debentures for financial matters.
No Jacob, that's not the case in the US. Are you in another country? Perhaps the system is different where you are. IPOs in the US are often issued by companies that have never made a profit, and have very little historical data to support an investment.
Jacob -- I don't really understand what you mean by this:
"Noreen, any investment through IPO or in equity is beneficial, in long term run."
Re: IPO for long run
Jacob
1/3/2012 7:37:20 AM
cat tail, i think you are talking about NFO-New Fund Offer. IPO's are issuing by companies already in market for a long time and with a proven track record. As i mentioned, any equity investments can fetch you a good return in long term run.
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