Recently I have been developing a stock trading bot to varying degrees of success (as of right now I've lost 3%, but there have been numerous bugs, and it's only been running for 2 weeks. Simulations I've run using past data say I could get upwards of 700% APR) and in discussing this with my friends, I've noticed that perhaps not many technically minded people are familiar with statistical analysis and financial literacy. I won't talk about stats today, though I'd argue it is one of my favorite math subjects (if you're interested in learning it, there's a great website to do so), instead, I want to make some really terrible analogies between some basic investments and food.
Stock - A basic ingredient, like an egg or flour or milk. Each one has its pros and cons, and having a good mix can lead to something nice (or, if not done right, something not so nice)
Penny Stock - a really cheap stock that's also really risky, like old fish. Potentially really good if you cook it (or ferment it) right, otherwise it can mess you up
Blue Chip - a name brand that you can trust, or be reasonably sure that it's decent quality
Dividend - A little bit of extra that comes with the stock, like the extra cheese from a pizza slice or the batter bowl from making cookies. It's not really the main part to strive for (unless that's your thing), but it's certainly a nice perk
Diversification - Having a well balanced diet is important. Diversify your ingredients to stay healthy!
Mutual Fund - Essentially a Lean Cuisine. Someone else has chosen the ingredients for you. They're probably not bad, but you don't have control over what goes inside of it
Bond - a low risk investment. Mac and cheese or a ham sandwich. You know what you're getting, you've got a little variety, but overall it's hard to go wrong
Option - A by-product of the actual stock, more like a bet on what the stock's price will be in the future. This could be kinda like the husk of an ear of corn, where the kernels are the stocks themselves, and you make a guess as to how good it'll be based on the quality of the husk
ETF - Similar to a mutual fund, but maybe a bit riskier. Think more of a general microwave dinner - might be healthier than a Lean Cuisine, might not be, either way it's a little riskier
And of course, everything burns.
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