Investing in the stock market can be scary. It’s a combination of big promises, jargon, fear, greed, and mostly, a lot of opinions. No wonder folks are always explaining the stock market.
Everyone’s an expert. I recently read that Gen Z gets their investing advice from their friends.1Source: Wall Street Zen That sounds terrifying.
But it doesn’t have to be. Investing in stocks is not that complicated. So instead of using investing jargon to explain it, let me share three metaphors with you.
Metaphor 1: The Stock Market as Farming
Picture the stock market as a farming field. Just as farmers plant seeds and patiently wait for them to grow, investors buy stocks and wait for them to appreciate. The concept of sowing and reaping is central to both farming and investing.
When you sow, you have an empty field. When you start investing, you have an empty account.
It’s really hard to picture yourself with full-grown crops. It’s also hard to imagine you’d have a 7-figure portfolio when you start with $0.
And then there’s the idea of seasons.
In farming, there are seasons of scarcity, and the farmer must wait for the right time to sow seeds. Similarly, in investing, there are times when the market is down, and it might seem like your investments are not yielding any returns.
But remember, just as the farmer doesn’t abandon his field because it’s not harvest season, you shouldn’t abandon your investments because the market is down.
When the harvest season arrives, the farmer reaps the rewards of his patience and hard work. In the same way, over time, your investments can grow and provide a substantial return – your financial harvest.
Metaphor 2: The Stock Market as a Board Game
Now, imagine the stock market as a board game. It’s a game of strategy, where wins and losses are part of the journey.
There will be turns where you advance quickly, akin to successful investments that skyrocket in value (think of the AI stocks in 2023).
Conversely, there might be times when you land on a spot that sends you back several spaces, similar to investments that don’t pan out as expected (the inflation scare of 2022).
However, the goal isn’t to win every turn but to make progress towards the end, just like in long-term investing.
It’s not about immediate gains but about advancing your overall financial standing. You need to strategize, take calculated risks, and sometimes, accept losses. But remember, setbacks are temporary. Keep your eyes on the prize, and keep playing.
Metaphor 3: The Stock Market as Creating Art
There is no one way to create good art. But some guiding principles make a certain art piece beautiful, regardless of how you make it.
Take writing, for example. There are various types of successful writing in the world. Some writers write in a poetic voice, like Jorge Luis Borges. While others keep things minimalist, like Ernest Hemingway.
That’s one thing to remember about investing. Some people choose to trade actively. Others prefer passive investing.
Sometimes, an investor chooses to do both at different periods. Both types of investors can build wealth from the stock market if they follow one of the main guiding principles of investing: Which is to invest in what you know or understand.
The renowned stock picker, Peter Lynch said it well in his book, One Up On Wall Street: How To Use What You Already Know To Make Money In The Market.
“Know what you own, and know why you own it”
That might work for some, and not for others. Just remind yourself there’s no one way to invest. If someone believes in crypto, it doesn’t mean that all other investments are stupid. And vice versa.
The beauty of capitalism is that you have a thousand and one ways to earn money by investing. That makes it exciting and hard at the same time.
Investing: Playing a board game, making art, and farming
View the stock market as a farming field, a board game, and as creating art.
It’s not one or the other. The stock market is all those things. And that’s why it’s the most exciting manmade construct in the world.
Successful investing requires patience, strategy, and personal expression. It’s truly fascinating. And you’re never finished learning.
