I need some help. I’m a college sophomore majoring in political science and minoring in economics. This semester, I’m taking an introductory finance class, which is interesting, but also hard. I haven’t aced a test or quiz the whole semester.
This coming week, I’m supposed to present an investment topic and lead a short discussion. I want to present something people won’t expect. My roommate suggested that I explain the difference between the Dow Jones Industrial Average and Nasdaq, but those seem too easy.
There must be something better to talk about that’s still simple enough to get through in ten minutes. Any ideas would be much appreciated.
Presenting an investment topic to a classroom full of relative novices is never a simple feat. Investing is often considered a complicated subject, because few people can explain its intricacies. Turning to the Internet for answers is an option for just a privileged few. Amy Wu at Pollyport does a convincing job of explaining why information on investing is confusing. She captures the common dilemma people face by declaring, “information is nowhere near as easy to understand as it is accessible.” You can take the Dow Jones Industrial Average (DJIA) and Nasdaq as prime examples.
There’s no shortage of people who confuse both terms with the marketplace itself. Still others are unaware that the DJIA and Nasdaq are, in fact, only a couple indices utilized by investors. Fortunately, Jay Jenkins at The Motley Fool did readers a favor by outlining the major differences. The key takeaway is the fact that indices are tools used by investors to measure how a given market is performing. In other words, indices act like rulers, and inform the decision-making process. Legitimate investors refer to the approach as index investing. You can learn more about index investing, thanks to Matt Becker at The Simple Dollar.
Another direction to consider is presenting the difference between day traders and swing traders. Whereas index trading is considered a passive approach (i.e., minimal interventions and decisions), day and swing trading is considered an active approach (i.e., regular interventions and decisions). Cory Mitchell at The Balance covered the basic pros and cons of day trading versus swing trading. That’s an excellent place to begin. According to him, investors can expect different time commitments, risk profiles, and profitability potentials, just to name a few.
Staff writers at Investopedia echo what Cory proposed, and further recommend that investors learn technical analysis. At the end of the day, there’s a pretty wide range of viable strategies available to investors. The trick is finding the right one. Swing trading strategies may be a better fit for those who dislike day trading, primarily because of the time commitments. Index trading is a better fit for those who prefer to eschew any activity altogether. Neither one is better than the other; they just enable a different lifestyle. That’s often the most important thing for investors in the long-run.
“Strategy is a fancy for coming up with a long-term plan and putting it into action.” - Ellie Pidot
