Summary of Michele Cagan's Investing 101

By IRB Media

Please note: This is a companion version & not the original book. Book Preview:

#1 If consumers spend money, the economy can grow; if they don’t, it can’t. Understanding the economy and its cycles helps you take advantage of impending changes.

#2 If you're going to invest your money, you don't need to know a lot about how the economy works or the finer points of its more obscure corners. However, you do need to be aware of some basic principles.

#3 If you want to invest, you don't need to understand the economy. However, you need to understand some basic principles.

#4 Know your income, and invest accordingly.

• Language: English
• Publisher: IRB Media
• Release date: Sep 15, 2022
• ISBN: 9798350029222

IRB Media

With IRB books, you can get the key takeaways and analysis of a book in 15 minutes. We read every chapter, identify the key takeaways and analyze them for your convenience.

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Insights on Michele Cagan's Investing 101

Contents

Insights from Chapter 1

Insights from Chapter 2

Insights from Chapter 3

Insights from Chapter 4

Insights from Chapter 5

Insights from Chapter 6

Insights from Chapter 7

Insights from Chapter 8

Insights from Chapter 9

Insights from Chapter 10

Insights from Chapter 1

#1

The most basic premise of the economy is that if consumers spend money, the economy can grow; if they don’t, it can’t. When the economy is sluggish, consumer spending lags, overall corporate growth stagnates, and investors see poor returns. When the economy is booming, people spend money, corporations prosper, and investments grow.

#2

The economy is a very complicated mechanism, and it’s important to understand that it allocating the things we need to live. You don’t need to know a lot about how the economy works, but you do need to understand some basic things about it.

#3

The value of something is what it’s worth. This value is partly what you use the item for and partly the monetary value that we assign to it. Value isn’t constant, though. Some things have value that changes quickly.

#4

Income is money you receive from different sources to buy what you need. Knowing your income is important since it allows you to live within your means and not spend more than you have coming in.

#5

Interest rates are the prices borrowers pay to the lenders. They are affected by the Federal Reserve.

#6

The Federal Reserve System was created in 1913 with the responsibility of creating and maintaining interest rates and administering U. S. monetary policy. It supervises and regulates banks and acts as a financial servicer for the U. government and various lending institutions.

#7

When the Fed lowers interest rates, the money supply increases. This often signals investors to buy stocks, as lower interest rates make stocks appear more attractive on the risk/return scale.

#8

The most important economic indicators for investors are the GDP, the consumer price index, the unemployment index, job growth, and housing starts.

#9

The consumer confidence index monitors consumer sentiment based on monthly interviews with thousands of households. The index dropped drastically after the terrorist attacks of September 11, 2001. It remained fairly steady for several years, but dropped again in 2008 as news of home foreclosures, the credit crisis, and government bailouts frightened consumers into saving their money.

#10

The housing industry represents more than 25 percent of total investment dollars and about 5 percent of the total economy, according to the U. S. Census Bureau. Declining housing starts indicate a slumping economy, and increases in housing activity can help turn the tide and put the economy on the road to recovery.

#11

Sector rotation is the practice of investing in different sectors of the economy, which typically perform better during specific stages of the economic cycle. To take advantage of this, you must first understand the sectors themselves.

#12

The economic cycle is a very definite pattern. When the economy is in a deep recession, the next phase of the cycle will be an upturn, a good time to begin investing more actively.

#13

You can diversify your portfolio by investing in sector funds. These mutual funds invest in single economic sectors, and