Retirement Guys: Black Friday shoppingWritten by Nolan Baker Mark Clair | | firstname.lastname@example.org
For millions of Americans, my family included, it’s a long-standing tradition to do some serious shopping on Black Friday. I, Nolan, as a child used to go with my family to the mall in Fort Wayne, Ind., on the day after Thanksgiving. My two favorite shops as a child were the coin shop and the pet store at the mall. The tradition of shopping the day after Thanksgiving dates back to 1924, with the kickoff to shopping after the Macy’s Day Parade.
One story says the term “Black Friday” dates back to the 1960’s when businesses used to keep accounting records by book. A red pin was used up till the point the company turned profitable, then a black pen was used which was often after the kickoff of the holiday shopping.
Black Friday shopping involves having a strategy in place and sticking with a discipline. If the plans are in place it can be a lot of fun. But, if a shopper doesn’t have a strategy they often end up missing the deals and end up with a heck of a lot of stress. The same principles of Black Friday apply to shopping on Wall Street. The good news about shopping on Wall Street is that it’s not just one day a week. There’s no need to get up at 3 a.m. and stand in a long line outside in the freezing cold.
Interested in learning how to conduct Black Friday shopping on Wall Street? First, understand that volatility can lead to opportunity. The fear of the “fiscal cliff” and other concerns has started to lead toward a stock market decline that could continue to make stock prices even lower in the future. Emotions of fear and greed get the best of shoppers on Wall Street and on Main Street. When looking for investments to purchase at a discount look for intrinsic value. In simple terms, that means using a formula, not your gut, to look for an investment that could be selling at a discount.
The price of a stock goes up and down due to the number of buyers and sellers. An individual investor has little if any control over a stock price. Yet, the value of the business, such as a company’s balance sheet, only changes as the economic conditions change at the company. When the stock price drops below the expected business value, it creates an opportunity that could be a discounted stock price.
Benjamin Graham was one of the original pioneers of value investing and in 1949 he wrote “The Intelligent Investor.” His philosophy of buying stocks at a discount meant buying stocks that were trading below their net current asset value. Although some investors may not know the name Benjamin Graham, many investors know one of his disciples, Warren Buffett, who was a student of Graham’s at Columbia University.
Good luck to those of you who not only follow our advice for Black Friday shopping on Wall Street, but also to those of you who are brave enough to go out shopping this Friday on Main Street.
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