Buying Stocks When the Economy is Down
Hi Benjamin, can you help me understand what I should consider when buying stocks?
"Can you help me understand what I should consider ...?" contains an embedded question ("what I should consider ..."). The embedded question is an object question ("What" acts as an object), so we reverse the word order of "I" and "should" and ask "Can you help me understand what I should consider ...?", NOT "Can you help me understand what should I consider ...?"
Sure Cindy, when you're buying stocks, you need to look at the company's performance, market trends and the economic situation.
That's a lot of info and I'm not an [vocab word=economist]economist[/vocab]. Can you tell me which stocks are the most stable for investment?
The word "economist" has a suffix "ist". This suffix is for people who does something. An economist is a person who studies economics.
"Can you tell me which stocks are ..." has an embedded question. It's the same question as "Which stocks are the most stable for investment?" but the question with an embedded question is softer and more polite.
Well, [vocab word=utility]utility[/vocab] stocks are generally safe and stable. Do you know why they are considered a safe investment?
Benjamin is asking a question with an embedded question "Do you know why ...?" He could've asked "Why are they considered a safe investment?" but the one with an embedded question is more polite.
I'm not really sure. Is it because they provide essential services?
Yup. Also, starting a utility company like a power company or a [vocab word=telecommunication]telecommunication[/vocab] company requires a substantial amount of money. As a result, there are only a few large companies in these [vocab word=industry]industries[/vocab]. That means these companies don't really face much [vocab word=competition]competition[/vocab].
I see. You are so [vocab word=knowledgeable]knowledgeable[/vocab]!
"Knowledgeable" combines the word "Knowledge" and suffix "able" - it means having a lot of knowledge.
Thanks. Do you have any idea when would be the best time to invest in utility stocks?
Winter may be the best time, right? Because that’s when the [vocab word=demand]demand[/vocab] is high due to heating [vocab word=need]needs[/vocab]?
"Due to ..." means "because of".
In [vocab word=general]general[/vocab], that may be true but it's not always that simple. You also need to consider other [vocab word=factor]factors[/vocab]. Do you know what else affects the price of utility stocks?
In the question "Do you know what else affects ...", "What else affects ..." is a subject question. "What else" acts as the subject. So, there is no need to reverse the order of the words. You just put your main question ("Do you know") in front of the embedded question ("what else affects ...?").
Changes in [vocab word=government]government[/vocab] [vocab word=policy]policies[/vocab]?
Correct. Government [vocab word=regulation]regulations[/vocab] and [vocab word=infrastructure]infrastructure[/vocab] investments can [vocab word=impact]impact[/vocab] the prices of utility stocks. Also, utility stocks perform [vocab word=relatively]relatively[/vocab] well during [vocab word=recession]recessions[/vocab]. That's because people still need essential services like [vocab word=natural gas]gas[/vocab] and [vocab word=electricity]electricity[/vocab] even when they lose their job.
I see. What about tech stocks? I know they are not stable, but they provide a better return on investment, don't they?
Note, Cindy is using a question tag ("don't they?") to ask a question. She is sure of the answer, but wanted to ask to confirm her belief.
Note 2: "return on investment" (ROI) means the money you earn from your investment, usually in %.
Many technology stocks are growth stocks, meaning they grow very fast during economic [vocab word=boom]booms[/vocab]. Do you have any idea where tech stocks stand in the [vocab word=current]current[/vocab] market?
Note the word order and the lack of "do" in the question. Correct: "Do you have any idea where tech stocks stand ...?" Wrong: "Do you have any idea where do tech stocks stand ...?"
From what I've heard, they're doing really well. Do you think if their prices are still going to go up?
It’s hard to predict exactly, but I think they can still grow more. However, remember it's important to [vocab word=diversify]diversify[/vocab] your [vocab word=portfolio]portfolio[/vocab].
Can you tell me how I should diversify my portfolio in the current market?
"how I should diversify ..." is an embedded question. Note, we don't ask, "Can you tell me how should I diversify ...?"
Because the economy is doing well these days, I'd put around 60 to 70 percent of my money into technology and other growth sectors. I'd also invest around 20 percent in [vocab word=defensive]defensive stocks[/vocab], like utility stocks. I would keep the rest of my money in [vocab word=cash]cash[/vocab].
I'd = I would
Thank you so much for your advice! Now, I have a better idea about investing in stocks!
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