Although Karen Blumenthal has been a business reporter and editor for over 25 years, she—like many people—found herself a bit mystified by the stock market. To make some sense of it, she tells Jean, she chose to follow Starbucks's stock for a year, chronicling her discoveries in her book Grande Expectations.
Karen's decision to follow just one stock stemmed from a desire to learn what to focus on—how to narrow down the information and study the gap between actual events and investors' expectations. She says it's important for everyone to understand how the market moves for the sake of your own investments, as well as to understand what your financial planner or adviser is doing with your investments.
While investing can be very rewarding, Karen says you'll fare even better if you research companies you're interested in. There is a lot of information accessible to investors today, from annual reports to conference calls to online transcripts. Financial websites can also provide information with a more objective view. Some companies have investor relations departments that will answer some questions, Karen says, but the average person can't get the same level of information that a professional investor can.
For those just starting on a stock portfolio, Karen offers the following advice: