Whether someone conducts hours of research looking through balance sheets and quarterly reports of individual companies or funds in the stock market or not, there is one thing both types of investors can agree on.

Buy low, sell high.

This buying and selling refers to someone buying a share, or a piece of a company, at a lower price, watching it grow to a higher price over time, and then selling that share for more money than they bought it at. An example of this would be buying a share of Apple for $100, holding it for a year, and then selling it for $115, thus making a $15 profit.

According to statista.com, a consumer survey database regarding industry studies, 55% of Americans are invested in the stock market, consistent with the 55% investment rate from 2018 and 2019.

Despite this relative consistency, however, investing became a large topic following the stock market crash in the beginning of 2020. The S&P 500, a value combination of the top 500 stocks, fell from $3,380.16 on Feb. 14 to $2,304.92 on March 20.

This 32% drop in the S&P 500 share price classified it as something of “low” value, and the stock rebounded at roughly $3385.51 by Aug. 20.

Until the end of the year, the stock market continued to trend upwards.

Then, “the GameStop situation” happened. In order to combat against many wealthy people associated with the “top 1%” who were shorting (betting against) beaten down stocks such as GameStop or BlackBerry, many people on a Reddit group called “wallstreetbets” bought a ton of shares in the two companies in order to combat those shorting efforts.

Despite the fact that these two companies were flirting with bankruptcy over the course of the past few years, their share prices skyrocketed.

“I came out of it $200 up, as I only bought one share of GameStop when it was $13,” UWO sophomore Connor Bukoski said.

While Bukoski flipped a profit out of the GameStop situation by buying in early, many people lost tens of thousands of dollars worldwide by buying the stock at an inflated price and holding it for too long.

“I really think young people need to understand that what is going on with some of these super volatile stocks is not really investing,” said Jeff Kemp, who retired early and gives free annual investing classes at Oshkosh North High School and the Oshkosh Seniors Center. “The trading has nothing to do with evaluating the value of a particular company; it’s all about trying to time your purchase of the particular stock while it’s going up and getting out with a profit before it goes down.”

According to the Yahoo Finance-Harris Poll, 28% of Americans bought GameStop or other viral stocks in January.

This type of trading, where research isn’t considered a top priority, isn’t exactly new, but the market that it is in is new. Instead of a culmination of people dumping money into stocks where each share is only a few cents, this type of “hype stock buying” through groups such as wallstreetbets has made its way into slightly larger market capitalization (total amount of money invested into a stock) companies.

“What is going on with stocks like GameStop has been going on for 50 years,” Kemp said. “The trading simply has moved from penny stocks to smaller market capitalization stocks in the broader market indexes.”

Kemp said that instead of simply tossing money into an individual stock and praying that the share value goes up in order to flip a profit, young people should consider long-term, conservative investing strategies such as a retirement account like a Roth IRA.

These accounts typically invest one’s money into a broader market, such as the S&P 500 or a total stock index fund, that will match the long-term gains of the stock market.

“I would suggest a young person first save some money and build a cash reserve of a few thousand dollars and put it in the bank,” Kemp said. “A smart investment choice would be a 2060 Target Retirement fund to invest in within the IRA.”

Many family brokerages will allow a Roth IRA retirement account to be set up. Otherwise, depending on the job, many occupations will allow their employees to set up a 401k retirement fund where a portion of their check (of their choosing) is put into one of these broader markets as it accumulates interest over time.

If someone put $1,000 into an S&P 500 index fund per month for 22 years, and if they see an average of 10% growth per year, that person will have $1 million in their account. This does not count the dividends, or time-incremental payments being paid to an investor for continuing to hold onto a stock, paid to someone on top of their profits due to share difference.

That example is among many others showing that while investing in a broader market index fund doesn’t seem as exciting, long-term gains are more likely to happen than if someone were to dump money into a hype stock like GameStop where their investment doesn’t represent the market as a whole.

“In my personal portfolio, I only use the Total Stock Market index fund to invest in equities,” Kemp said. “My goal as an investor is to match the returns of the stock market, and I know that I will accomplish that goal every time using that index fund. It certainly isn’t flashy, but it works as an investment strategy and it works with much less volatility risk than the other approaches to investing.”

Investment applications, such as a Roth IRA, that allow someone to open a retirement account are TD Ameritrade, Fidelity, M1 Finance and many others.

For any additional questions on how the stock market functions, Kemp is available and open to answer questions submitted to his “Adventures In Investing” Facebook page at https://www.facebook.com/Adventures-In-Investing-169453006488584/.