No, there isn’t a mistake in the above headline. I am not asking whether you own stocks or bonds.
What I am asking here is – Are ‘YOU’ a stock or a bond?
This is the very first question you must answer before you get down to investing in the stock markets. But before that, you must be very clear about these two basic questions:
- What is a stock?
- What is a bond?
A stock is a share in a company, and thus its performance is dependent on how the company’s business does.
In short, a stock’s future performance is unpredictable. This is because it is backed by a company that has inconsistent earnings (in most cases) and subsequently inconsistent performance.
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