Beginner's Mind

MM 8: Brian Feroldi's Insight: Why Does the Stock Market Go Up?

June 29, 2023 Christian Soschner, Brian Feroldi Season 4 Episode 29
Beginner's Mind
MM 8: Brian Feroldi's Insight: Why Does the Stock Market Go Up?
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Show Notes Transcript

Join us as we dive into a captivating discussion with Brian Feroldi, a financial educator and author, who simplifies the complex world of investing.

In this episode, Brian shares his insights on why the stock market goes up, the power of cost averaging, and his biggest investment mistake.

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Full Episode

Book Mentions:

"Rich Dad, Poor Dad." Link: 

"One Up on Wallstreet" Link:

"Why Does the Stock Market Go Up" Link:

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00:00:00:11 - 00:00:28:04

Christian Soschner

Ever felt lost in the complex world of investing. Then meet Brian Farideh, a financial educator and author who's on a mission to demystify the stock market. In his book, Why Does the Stock Market Go Up? Brian breaks down complex economic situations into simple terms. Join us as we bridge the gap from financial confusion to clarity and learn by understanding.


00:00:28:04 - 00:00:34:14

Christian Soschner

The stock market is crucial for everyone. Your journey to financial literacy starts right here.


00:00:36:08 - 00:00:59:00

Brian Feroldi

So first, let's understand some basic about me. I never would have guessed that I would be an author ever. I am someone that has been I am a barely barely literate with the English language. English was my worst subject in school. I got mediocre grades in English my entire life, and I have the worst. I have terrible handwriting.


00:00:59:01 - 00:01:19:15

Brian Feroldi

I'm bad with grammar. I am bad with spelling like nothing about nothing about my history, says writer. Like absolutely nothing. So I never had a dream to write a book or anything like that. When I started writing with The Fool seven years ago, obviously I had to get better at writing simply because of the amount of effort that I had to put into the repetition.


00:01:19:15 - 00:01:50:00

Brian Feroldi

My early articles required ungodly amounts of edits because my writing skills were just so poor at the time. But for for for more than a decade now, I've had a nagging question in my head about investing books, and that is I never understood why there wasn't a simple book out there that just explained in plain English what the stock market is, how it works, and how investors can take advantage of that.


00:01:50:14 - 00:02:17:03

Brian Feroldi

I myself love reading books about the market and investing. I've read so many wonderful books by by Peter Lynch about Warren Buffett, by Seth by Seth Klarman. Right. All of the all the classic books out there that people read when they when they want to read about the market. I've read and I've absolutely loved. However, I never found a book that explained the most important question I had about investing.


00:02:17:09 - 00:02:42:11

Brian Feroldi

The most important question that I had was why does the stock market go up? I think a lot of people have seen the chart of the S&P 500 over the last 150 years. When you look at that, it's as clear as day what you should do with your money, Right. It's invest in the stock market. The stock market has gone up about 10% per year, not only compounded at that rate for over 100 years in the United States.


00:02:43:01 - 00:03:06:09

Brian Feroldi

That does it makes sense to me intuitively. Why is there this thing that continually goes up in value is plenty of squiggles, plenty of back traces along the way. But I never understood what was the what was the reason that this thing kept going up? Was it just a bubble? Was it like a 100 year bubble that was waiting to burst?


00:03:06:15 - 00:03:34:20

Brian Feroldi

The it was never explained to me the relationship between stock prices and corporate profits. And I just firmly believe that 99% of people out there don't understand that relationship, the relationship between what stock prices are and what business profits are. The reason is that the thing about the stock market that is crammed down our throat is price. It's price.


00:03:35:10 - 00:03:54:12

Brian Feroldi

You go in the news, what do you hear? What did the Dow or the S&P 500 do today? And of story. That's it. That's the only information you get. So if you're if that is your relationship with the stock market, seems like a random number generator. Some days it's up, some days it's down. Right. Why would you pay attention to this thing that goes randomly up and down?


00:03:54:20 - 00:04:19:01

Brian Feroldi

What's missing from the conversation is the thing that drives price in both the short and the long term. And that thing is the businesses behind those indexes. So since no such book existed, my frustration after waiting for one to be written for years. Finally cult the cult cultivated in me saying maybe I'm supposed to be the one that writes it.


00:04:19:17 - 00:04:32:06

Brian Feroldi

And it took me about 18 months to do so. But that's why the book exists. I didn't think we needed another book about investing. I thought we needed one that explained in plain English what the stock market is for beginners.


00:04:33:14 - 00:04:59:13

Christian Soschner

Thank you for tuning in to this insightful discussion with Brian Feroldi. If you found it valuable, please subscribe to the channel. Each subscription helps to grow the community which in turn opens up opportunities to bring more renowned speakers from around the world to the platform. If you believe this episode could benefit others in your network, don't hesitate to share it.


00:04:59:22 - 00:05:14:08

Christian Soschner

Knowledge shared is knowledge multiplied. Remember every subscription and share counts in this journey of lifelong learning. Stay tuned for more discussions and keep learning. Keep sharing and have a great stay.