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Today I have a special episode for you.
I’m sharing a sneak peek into an incredible new project launched by Tyrone Ross. (You don’t want to miss this.)
I’m also joined by Caleb Silver, Editor in Chief for Investopedia.com.
We talk about three big things:
- How he thinks about the media’s role in financial content and education
- The biggest investing mistakes readers made in the last 12 months
- What you need to know about fractional shares, limit orders, and SPACs (in plain English!)
If you want to learn how to be a better investor from the person leading the charge at one of the largest financial information websites, you’ll love this episode.
How to Listen to Today’s Episode
Episode Links & Resources:
- 👉 Get Your One-Time Retirement Plan
- The Learn to Money Project [Tyrone Ross]
Big Investing Mistakes, Financial Media, and More With Caleb Silver
Caleb Silver: The gap in financial literacy is such a pain point for us as Investopedia because that's what we're here for. That's why we exist and that's really what gets me up every morning.
Taylor Schulte: Welcome to the Stay Wealthy Podcast. I'm your host, Taylor Schulte, and today I've got a really special episode for you. I'm joined by Caleb Silver, the editor-in-chief of investopedia.com, which is one of the largest financial information and educational websites on the internet.
But before I get to that interview, I want to share a project with you that Caleb and a number of other people recently helped with called Learn to Money. Learn to Money is owned, created, and hosted by my friend Tyrone Ross, who you might remember join me on the podcast last June.
Tyrone is one of the kindest, most inspiring, giving and motivating people I know and a lot more people around the world are gonna get to know this amazing human very, very soon. Not only because of the Learn to Money project, but also because he just delivered his very first TED Talk, which I cannot wait to watch. And he has some really big projects up his sleeve.
But in short, Learn to Money is a 10-episode foundational video curriculum that is aiming to help close the financial literacy gap and improve financial education around the world, especially in schools and especially for underprivileged youth.
The very first video was recently published and while the audio probably doesn't do the video justice, it's just too good not to share with everybody.
So turn your volume up and enjoy this gem.
Tyrone Ross: Like many of you, I grew up in a home that had to operate outside of the traditional financial system. You cash checks at a check cash-in place as opposed to the bank because there's no bank account. More having to use payday loans so that you're able to eat or pay the rent.
All I knew about money is that it was scarce. It was something that was in one hand and out the other because you needed it to acquire the basic necessities of life. It's not about prosperity, it's just simply about survival. So money is something that causes tension or stress because you never know when it's coming back and when you have it, it's already accounted for.
So today I'm going to teach you three words you need to know money, debt, and credit. So what is money anyway? Legally money is money because our government says it is. But what gives it value is that you and I both trust that it's worth something.
Thousands of years ago, we didn't use dollars when we bought stuff. If I needed a cow, I had to give you something. I had in exchange like 10 chickens together. We both had to trust and believe that 10 chickens was worth one cow. Eventually we started using coins instead of trading our things directly and that led to paper money.
Now, when I go to the convenience store to get a drink, they don't ask me to give them chickens in exchange, I just have to give them $2. The key is that we both trust that the $2 equals a drink and that the convenience store owner could take that $2 and go buy something else with it.
It's the trust that makes it money. So as I started to get a little bit older, I realized that money equaled the things that I wanted was all about jewelry and sneakers and clothes and never about saving or never about putting this money into something that can grow or ownership, which brings us to debt. Debt is just a fancy word for the money you owe someone else.
Here's an example we're all familiar with. You go to get a haircut. When you get your haircut, you just can't leave without paying. You owe the barber a debt and when you hand over that $20 bill, you are eliminating your debt to the barber.
The reason why he doesn't run after you with his scissors is because the barber trusts that he can use the same money somewhere else. But what happens if you don't have the money to pay the barber right now, you'll have to ask her for credit.
Credit is when you borrow money from someone else and agree to pay it back later. The barber isn't too happy that you don't have the $20, but after some begging, she agrees to let you pay it back in a week. The only catch is that she's going to charge you another dollar for that favor.
So now you owe $21, she's letting you use credit to pay the debt back at another time and she's charging you another dollar for that convenience. That's all credit is.
But most people know the word credit from credit cards. I discovered credit cards at 19 years old and I had no idea what an APR was or anything about the limit. I could just swipe this thing, this plastic thing and then they'd give me stuff. I realized I needed help when the bill collector started calling every day and demanding their money and threatening me that if they didn't get it, that this was going to happen.
I was in trouble and had to relearn everything I thought I knew about money. I had to learn what the richest knew about debt and credit, but also about budgeting, saving, investing interest and many more ideas we'll talk about in this series.
And that's why I'm so impassioned about this is because it's one thing to get you to learn about money or what money is or what you can do, but if I empower you, if I make you feel like you're as good as everyone else, your knowledge is just as good. You're just as powerful. You have all the same resources and ultimately you are in a position where I'm sitting now where you can give back to other people who grew up the same way that we have.
The most important thing is to trust yourself with money, to trust that you'll know what to do with it when you get it, and to trust that you really can live the way that you want to. I'm Tyrone Ross and we'll see you on the next one.
Taylor Schulte: I hope you enjoyed that as much as I did. I know you and me are not the target audience for the content, but it's just hard not to appreciate the amount of effort that went into producing that and recognize how much of an impact this project is going to make.
If you want to learn more and follow along and maybe even help support it, head over to learntomoney.org, which I'll be sure to link to in the show notes as mentioned at the top of the show.
I'm joined by Caleb Silver today and we talk about three big things in this interview. Number one, how Caleb and Investopedia think about the media's role in financial content and education.
Number two, the biggest investing mistakes that Investopedia readers made in the last 12 months.
And then finally we wrap it up with a rapid-fire Q&A answering what are fractional shares, limit orders, and SPACs and what role do these things play in investing.
For the links and resources mentioned today, head over to youstaywealthy.com/105.
Awesome. Well let's kick it off then. You brought up doing TV this morning. So that's kind of where I wanna start this conversation, which is, you've worked in media for a long time. I even saw that you majored in journalism.
So I thought I would start by asking you just about your opinion on the media's role and specifically Investopedia s role in the financial markets and day-to-day news cycle and in content production and distribution. Many financial planners like myself often suggest that people turn off the news and ignore the media and ignore these, you know, talking heads.
So I'm just kind of curious like to hear how you think about this and what you think about what I just said and how you approach these things as a journalist.
Caleb Silver: It's a great question and for years I worked at CNN and CNN Money, which is now CNN Business, and before that at Bloomberg. The news and particularly financial news, because that's the one I know is a very much a push, medium pushing information to you, extra, extra read all about it. This is the latest, we have the latest news, this guy resigns. Here's the earnings report. It's a push at you trying to capture your attention.
I came to Investopedia five and a half years ago because it was a site where I had learned a lot about business news and a lot about investing and a lot about the economy and it is an SEO-based site, it's a search-based site. 90% of our traffic is people coming in the side door, the back door, you know, the attic door because they have a very specific question and they are intent-based versus a news consumer who's grazing, you might say.
So our readers, the people that come to Investopedia on the regular are coming to us via a Google or a Bing or a Yahoo or what have you because they want a very specific question answered. And when you flip it like that, we become, as a publisher and as a media organization, a poll organization, we're pulling readers in based on their intent and their intent is very specific.
So we have to have the best content to match the intent. It's a different way of solving the puzzle. But I think that because people come to us because they have a need, we have a responsibility to educate them obviously to answer their question, but also to give them more education so they can take the next step.
Whether that's an investment decision, a family planning or retirement decision or a budgeting decision. That's kind of how I see us as differentiated from the places I used to work.
Taylor Schulte: Now you are on Fox News and CNN and you're on TV and CNBC and doing these things. What do you suggest to listeners who maybe watch some of these programs and shows and how, you know, any advice for how they digest some of this information in the day-to-day news cycle?
Caleb Silver: Yeah and those programs and I like them all and I do appear there frequently so that I can get out the message of what we see at Investopedia. We're really good at explaining what goes on in the world and that's kind of the role I take in the media.
But we also do a lot of surveys with our readers who are active investors. So we kind of have our finger on the pulse of their sentiment and their behavior and that's kind of the part I play on TV.
But for folks who have it on or think they need to watch it to make investing decisions or to make retirement planning decisions, it is a lot of noise. And the point of it is to capture your attention and the way that a lot of them treat, especially the trading day in the stock market is like a sport.
Why do they do that Taylor? Because it's great programming. So if you think about it, there's the pre-game, the pre-market, there's the kickoff, the opening bell, there's the halftime report or the power lunch or whatever you want to call it. You know, there's the final hour of trading, very dramatic.
And then there's the close and then the recap that is sports programming 101 and they invented that at ABC and the why World of sports years ago, that's the way a lot of financial media approaches it because it's kind of heart-stopping and you can't take your eyes off it and they're flashing breaking news as a new, as an investor, as an everyday investor, retail investor or somebody who's just trying to do their own planning or work with an advisor.
You could ignore most of that. Watch it to learn to educate yourselves to make your own decision but don't make the decisions that a lot of the guests they bring on make. Because as you know, they talk their book and they have an agenda, you gotta do your own plan.
But I think they can get very valuable education out of almost all of those platforms because at the end of the day they are journalists.
Taylor Schulte: So talk to us a little bit about Investopedia. Who is Investopedia? If somebody doesn't know who you guys are, what do you do and you know, how do you help investors and savvy retirement savers like the Stay Wealthy audience?
Caleb Silver: So we are a finance and investing educational website and Taylor we are gonna be 23 years old as August and an internet years that's 230.
So we've been around from internet 1.0 started by four guys up in Edmonton in Canada who had an idea to put a dictionary of financial terms and glossaries on the web because it was 1999, the internet bubble was popping and financial media was really having its moment and really it's beginning.
If you look at CNBC and Bloomberg TV where I used to work or CNN, and NFN, it was just beginning and it was this, everybody's interested in the stock market, retail trading is available to everybody.
So they wanted to put a glossary of terms up there to help people figure out what was going on. And they realized that there was a small company down in Mountain View California called Google, a couple guys working outta their garage, going to Stanford that were trying to index the internet.
So if they put those financial glossaries and terms up on the internet, Google might point to them if people were asking Google about them. So it was a really simple idea, but a very good one and it's had some staying power. They also decided they would put up test prep for folks trying to get a test for the series 63 or trying to become, you know, ACMT.
So there was a lot of test prep content on there as well. Well all of that was super valuable and they were the first to do it with a great brand name Investopedia is what it says it is, right? There's no murkiness about what we do, what we are.
Well it's passed through several hands since they created the site. And IAC Interactive Corp, which is a big holding company formed by Barry Diller owns Vimeo, it owns Angie's List, they don't match dot com for a period of time it acquired Investopedia and it brought it into its other publishing group, which is called dot dash, you know it as about dot com, internet 1.0, we're now a part of the dot dash network.
All of the sites in dot dash are intent-based sites. So there is our health site very well. There's Investopedia, there's the Balance, which is our personal finance site. There's lifewire, which is our technology site, but all of them are here to answer people's questions about whatever vertical that we're dealing in.
And so Investopedia has done that and we've grown over those last seven, eight years since we've been acquired by IAC to add news, to add retirement, to add family planning, to add economics content. So we broaden our approach and we've also added a whole new category and vertical for financial advisors and we award our financial advisors as the most influential
Every year you're an honorary member of the Investopedia 100 and that you are someone in the financial advisory community that uses your platform to educate your clients, to educate your fellow advisors and to promote the industry. So we're all about having the answers to people's questions but also these new categories for advisors like you, but also for investors like me and your listeners.
Taylor Schulte: If we take away the advisor segment for a moment, if we're just looking at Investopedia, do you guys have a target reader? Is there an ideal demographic that you're trying to create content for?
Caleb Silver: We don't, and what's odd is you'd think that it's mostly young people prepping for an econ 101 test or somebody prepping for their series seven test. But the reality is it's mostly folks Gen X, maybe a little bit younger, a little bit more male than female, but these are individual or what we call retail investors. And a lot of them are DIY investors who wanna learn how to invest themselves so that they can take matters into their own hands.
But there's also a lot of people who are looking for advice on how to find a financial advisor, how to work with a financial advisor, how to work with a planner. But more and more, you know, a lot of folks are trying to teach themselves and in 2020 was a huge year for new investors to join the stock market as market participants. We have a lot of those folks and they are 18 to 80.
Taylor Schulte: So you mentioned test prep a couple times, you mentioned some resources to find a financial advisor. I mean there is a ton of content on investopedia.com and I was just curious, kind of selfishly wanted to know are there tools and resources on that website that you guys make available that maybe even some of your most avid readers don't know about because maybe they're buried behind the scenes or buried in a menu somewhere.
Are there any other tools and resources that some people might not know about?
Caleb Silver: Sure. The most popular page on our site is our Investopedia stock simulator. And that allows people to really learn how to paper trade on their own and teaches them how to buy options, teaches them how to trade stop limit orders, the basics of trading and investing your own portfolio.
And people spend a ton of time on that as you can imagine. But that's how they really learn how to do it. And then they graduate off to a platform. So that's super popular and tens of thousands of people come through there and start a new, a new game we call them games, a simulated game of for investing every month. They go from that into our site to actually learn what a stop order is, what a limit order is, what a spread is.
And so it's a great place for people to practice that, just the trading aspect of it that's there.
We also developed a bunch of great calculators for mortgages for calculating your net worth for planning for retirement. So very simple calculators where we know you're coming into that page because you've Googled how much do I need to retire by the age of 65? Well that depends who you are, where you are, where you live and everything else.
But you come to that page, there's a great calculator there, there's a great article for people in various life stages. So behind a lot of the highly trafficked articles are tools that also allow folks to do their own simulations. And we think that's a great way to learn.
Taylor Schulte: I'll be sure to link to all that in the show notes. I'd love to pivot here and change gears a little bit.
I'd love to talk about financial literacy and specifically I'd love for you to share some of your comments on the financial literacy gap here in the United States and maybe even around the world and if accessibility is improving, how it's improving and what role you guys at Investopedia play in helping to solve this problem.
And maybe also use this as an opportunity to talk about the Learn to Money project with Tyrone Ross, which I know you're a part of at the top of the show I played the opening video that he and you guys all produced. So listeners are now familiar with it. But I'd love to just start the conversation here and talk more about this financial literacy gap.
Caleb Silver: Yeah, first of all, Tyrone Ross is a gem and a friend. And that learned money project is one of the things I'm most proud of in my career and I've had a 25-year career, so that should tell you something, we'll get to that in a second.
But the financial literacy, the gap in financial literacy is such a pain point for us as Investopedia because that's what we're here for. That's why we exist and that's really what gets me up every morning because there just isn't enough financial literacy.
It's not taught to you in school, even though you graduate college or really the day you walk into college, you're gonna walk right past the credit card table there where they wanna offer you a Frisbee and a free t-shirt to sign up for a new credit card.
You walk out of school, most folks with about $30,000 in debt, whether that's student debt or credit card debt. And you haven't learned anything about how to manage your money, how to invest, how to save for the future, compound interest. The basics tailored and drives us nuts. We think it needs to be taught very young as early as elementary school. But please high school at the very least and make it mandatory.
Only about 27 states in the country make it mandatory and it's only one class in their high school curriculum. We think it's as important or more important than any of the major subjects because this is something you're gonna live with the rest of your life, your money and your health.
The two most important things that you have going on for yourself are just not really taught that well in high school in our schools. And they need to be, and particularly the money aspect of it because everyone's gonna face those challenges and we're not giving people the best opportunities to step with their right foot forward when they're ready to become professionals when they get their first job, when they get out of college.
So we just beat the drama on that like crazy and do webinars on it, do very basic things. I started a TikTok channel for us because I know so many folks are starting to trade for the first time without any idea of what they're doing.
We wanna just slow it down and help people learn the basics so that investing and planning and budgeting and all these things that are really central to your life become part of the lifelong journey and they're not. Now there are things people don't want to talk about as you well know and it's just the wrong way to approach it.
Taylor Schulte: So talk to us about how this Learned Money project came about, your role in it, the goals, what Tyrone is doing. Would love to just kind of hear your thoughts there.
Caleb Silver: So Learn to Money is really Tyrone Ross Jr's dream of making sure that financial literacy is available to every child in America, but particularly those in the inner cities and places where he grew up, where it's just not even talked about. They don't talk about money, they don't talk about investing, they don't talk about how money is made or how to save it or what to do with it.
So Tyrone is very passionate about financial literacy and I met him attending several of these industry conferences that we all go to when everybody is talking about the latest ETTF or the latest technology that can help you, you know, screen for the most popular dividend stocks or whatever.
Tyrone's up there telling financial advisors and planners and investors five minutes from where we're sitting in pick your city, Boca Raton or Orlando Florida schools can't put food on the table for their kids. He was there raising money and raising awareness about what was happening all around us while we're sitting there eating shrimp cocktail and talking about ETFs.
So I immediately gravitated to him because you know we're birds of a, of a feather there, I really believe in this. Tyrone is out there actually doing something about it.
So he created this concept to do a video series called Learn to Money that teaches folks like he was when he was 15, 16, 17 years old about money so they don't walk into the next phase of their life completely unaware and start a life of debt that they can't get out of.
He created this idea for a video series hooked up with a couple of terrific producers that we're working with and as soon as I saw that he was doing it, he put out a tweet, I called him immediately and I'd known him because we were already working on some stuff and I said, whatever you need me to do, Caleb Silver, the business journalist who's been in this game a long time, I'm in whatever you need an Investopedia to do as a platform for amplifying learn to money, the video series and now a high school curriculum that teachers can teach to their students.
We're here to help promote and help you produce. So I've put our shoulders into it to help that get that off the ground and ultimately it will be a multi-part video series that takes on topics like debt, like spending, like investing, like compound interest in a very approachable way in a beautiful animated series.
And Tyrone is terrific on camera that goes with an educational curriculum so that if you're a high school teacher you can say I'm gonna do financial literacy this semester. I have the Learn to Money video series and the worksheets and the online work that I can give to my students and we can make that a project.
So there's no more excuses. We're putting it out there and we know that people need it and they're going to use it and I'm really delighted and honored to be a part of the project.
Taylor Schulte: Well you guys all did an incredible job, you know, especially Tyrone. I don't think the audio does it any justice, so I'll tell everybody one more time, go to the website, which I'll link to in the show notes and watch this video. It is just absolutely incredible.
And you know, while it was made for a younger demographic people in a middle or high school, I think a lot of people can learn from it. You know, when I was approaching the professional world, I was interviewing for a couple firms and the first question one of my mentors asked me was, what's the difference between a stock and a bond?
And I just like, I was stumped, you know, and here I am searching for a job in finance and I couldn't accurately tell him the difference between a stock and a bond. So I think a lot of people can learn from this video and you know, you guys and Tyrone especially just have an incredible way of telling stories and educating people. So it gave me the chills watching that video for the first time. So well done.
Caleb Silver: It gave me the chills watching us produce it and just seeing the passion that Tyrone brings to it and the animation that you mentioned is, is special. Learntomoney.org and I know you'll link to it but it is something I'm really honored to be a part of.
Taylor Schulte: Yeah, absolutely. Well thanks for sharing all that. Let's switch gears and talk about the recent Investopedia survey that you did titled Middle-Aged Risky and going at it alone. I've got a few questions here, but I'd love for you to just get, kick it off and share some of the highlights from the survey, some of the big takeaways.
Caleb Silver: Yeah, it was gonna be my new album cover, but I'm not going at it alone because I'm happily married. But, and this was a survey we've been surveying our readers since the pandemic before the pandemic began for their sentiment.
We have about 1.5 million daily newsletter readers across our five or six newsletters. So they're all levels, there are white belts and there are green belts and there are black belts and investing and in and in trading.
So they come to us from all sorts of walks of life, but we've been surveying them to get a sense of their bullishness or barness, what they were worried about, where they were putting their money, their favorite stocks or securities. Were they concerned about the political landscape, were they concerned about covid and the pandemic and the resurgence of that.
So all along, every six weeks we do a new survey and we come out, you know, with data that shows us putting our finger on the pulse of the investor and we're able to express that by me going on television and talking about it and going on podcasts and going on the radio and my own podcast because knowing how people feel and how they're allocating their money is fascinating for financial planners but also for regular investors.
Do you wanna, you wanna know, are you, are you feeling some of the same sentiments that other investors are? Where do you stand in your own personal investing universe? So we've been doing that and then because so many new investors and traders began investing and participating in the market for the first time over the past 12 months, for whatever reason they were home.
They were, they had stimulus money, they were outta work, they were working from home. Pick your reasons, there was no sports to be on. 10 million people at least started investing for the first time last year and a lot of them did it kind of when that meme stock, GameStop mania was happening, jumping in and buying really hot and shorted stocks and people were getting burned.
So we wanted to find out are these people who the media, the financial media portrays them to be right. Is this your nephew home from college sitting in the den playing video games and trading stocks and yelling for his lunch to be brought in? Or are these folks you know, a different age group with a completely different mentality?
As it turns out, according to our readers, and I think our readers are a good representation of individual investors, a lot of these folks are middle-aged. They're in their forties, they're Gen X are a little bit older, they're putting real money to risk here, some putting as much as $500,000 at risk and a lot of them, 78% say they're teaching themselves how to do it.
Other folks are learning from websites like Investopedia and other good websites out there and only about 22% are using financial advisors for that information. So that's a huge wake-up call. The fact that there are so many new participants investing for themselves, teaching themselves how to do it, taking risks by over-concentrating in their portfolios or trading on margin in some cases or only having a couple of two or three stocks are doing a lot of turnover in their portfolio versus adding to positions for the long term.
We were surprised at who they were, how old they were, how well off they were and the kind of behavior they were exhibiting.
Taylor Schulte: Was there anything that surprised you in this recent survey?
Caleb Silver: The age surprised us most. We know there are a lot of investors that are Gen X, I'm one of them, but we also thought that there were many more folks in the sort of 18 to 28 category that were part of the retail trading wave that we've seen over the last six months.
And while it's true that there are a lot of young folks who do that, a lot of these folks are, like I said, middle-aged mid-career and they're trying to invest for the first time. That surprised me.
Also, a lot of the mistakes they admitted to making and God bless our readers, they're so honest with us when I, it's a gift to be able to do these surveys with them and have them tell us, you know, how they really feel. They admitted to a lot of mistakes Taylor and their interesting ones to learn from.
Taylor Schulte: Yeah, one of the things that jumped out to me was that 53% of their respondents, these new investors admitted to suffering losses with their investments in the last 12 months. And as we all know, the last 12 months have been pretty easy to earn a positive rate of return on your money. You could kind of throw a dart and make money.
So it was interesting to me to see that over half of them admitted to suffering losses. And it sounds like it was mostly due from some of these common mistakes and maybe this is a good opportunity for you to run through some of those common mistakes and, and share it with our listeners.
Caleb Silver: You hit their exact nail on the head there, they admitted to making mistakes. 86% said they made some gains. And like you said, it was hard to not make money, but if you were trading frequently, it's a good way to lose money, especially if you don't know what you're doing.
So here's some of the common ones that we, that we saw and we asked them straight up, we gave them a list of about a dozen and here are the ones that came up the most often timing the market.
Two-thirds say they try to time the market at least sometimes. We always say, and you probably say this too, it's timing the market, not timing the market that works because who can time the market? Nobody, you may get lucky once or twice, but a lot of folks tried to do that. Buying at the low, selling at the high. It's really hard to do that.
And two-thirds of our respondents admitted to doing that, 56% overweight their portfolio in just one stock or one asset class. So if they really believed in e-commerce, they were loading up on just e-commerce stocks. If they really believed in Amazon or Tesla or GameStop, they were just loading up on that stock but not really adding to the position and building a long-term position by dollar cost averaging their way in just buying it and trading it and hoping to flip it as a higher price waiting for, you know, waves in the trade to be able to come in and out and make some money.
A lot of folks, 40% admitted to being too reactive. They made trades on gut feelings alone. Who hasn't done that? I've done it. But you know, when you do it, you usually end up wrong because you can't time it and your gut doesn't know what's gonna happen and it's, it's a risky place to take some chances. 12% Taylor said they traded on margin in the last year. That's not a lot, but still folks trading on margin who are new to the market, new traders, new investors is a great way to get your hands burned.
25% of those who said they traded on margin said they knew what they were doing. So 75% had no idea what they were doing. And one of the most dangerous trades you can make if you don't have that skillset.
Taylor Schulte: Yeah. How often do you guys run these surveys?
Caleb Silver: Every six weeks. This was a special one where we very explicitly said, we want to know your sentiment, but we're also asking you our readers who's new to the market and that you've just joined in the last 12 months and who's been here longer. So then we could split it out and just look at what new traders we're doing versus older traders and investors and older traders and investors have the benefit of experience.
Some have been with us for a long time and have been through a bunch of different market cycles, including the great financial crisis, including, you know, the.com bubble. So they've seen some cycles and we always can hear them when we get the surveys back because they're cautious, they're a little bit more careful and they've seen some of these movies before, so, so they're a little bit more trepidatious.
The newer, bolder investors and they're not all 23 years old are, you know, the ones who are taking risk and and learning what happens when things go wrong.
Taylor Schulte: Yeah, well I have to say that I was pleasantly surprised to see that podcasts were the third most used medium or source used to get financial information during the pandemic. So I was happy to see that just below websites and news outlets. So podcasts came in number three there.
Caleb Silver: Hallelujah. Hallelujah.
Taylor Schulte: Well you mentioned a few minutes ago that you have a TikTok channel. TikTok has been a lot of fun for my wife and I to, you know, kill some time, especially during the pandemic. We had a lot of fun with it.
But you've done a great job building this TikTok channel for Investopedia. I thought it'd be fun just to do a little rapid fire here with some of the topics that you've covered on the TikTok channel, things that I really haven't talked about here on the podcast. So my first question is, what are fractional shares and why are fractional shares important to investors?
Caleb Silver: Great question. You know, I used to get this question all the time. Friends of mine who know I where I work and they would say, Hey, I wanna buy Amazon or I wanna buy this or that stock but it's $2,000 a share or I wanna buy Berkshire Hathaway but it's $250,000 a share.
Well in the last few years many of the big online brokers have offered what they call fractional share. So they are what they say they are. You can buy a fractional piece, a dollar amount of a stock versus buying in one share of the stock on its own. Because if you can't afford that one share then it means you couldn't get exposure.
Well now Schwab, now Fidelity, even Robert, they all offer some form of what they call stock slices or fractional shares. So you can choose when you go to make that order, that buy order, whether it's gonna be an amount of shares, 10 shares or $10 worth and that allows you to accumulate a position.
But you know what they're also great for Taylor is gifts. If you wanted to give somebody a couple hundred dollars worth of amazon.com as a graduation gift or pick your stock that you wanna give them, you can do it via fractional shares. It's so much easier and it takes that, you know, the stress of I can't afford the stock but I can put in a couple hundred bucks and get access.
Taylor Schulte: What is a limit order and why would somebody use one?
Caleb Silver: This is another great one when folks go to buy their first shares of stock or they're starting to invest for the first time, maybe they have an idea of what they think a company's stock price should be or maybe they've done the research and maybe let's just pick WD 40. It's a stock I love to talk about because it's been around forever and everybody has a can or two in their toolbox stock at an all time high, many times in 2020, incidentally.
Taylor Schulte: Great San Diego company.
Caleb Silver: Yes, absolutely. So if you were, you know, if you wanted to buy that stock, but you don't, let's say it's trading at 80 bucks, you think 85, you know you want to buy it somewhere between 80 and 85, but you don't want to buy it. If it goes to a hundred, you place an order and you place an order with a certain price ceiling on it.
So if it goes above this, I'm not buying it. Or it allows you to place that order without having the risk of missing the price you want to get it at. And if you miss it, if it passes through that price, you miss it, but you set that limit order and then when it does hit that point again, then it exercises your purchase of that stock. So it's a great way to control the price you want to pay for the stocks you want to own.
Taylor Schulte: And we should also say that that would apply to ETFs as well. Exchange traded funds.
Caleb Silver: Absolutely ETFs to trade and are priced like stocks. So you can do that with ETFs, you can do that with stocks. I'm not sure on the commodities front if you can do that, but let's stick to those two categories right now. And it's a great way to sort of limit your risk and feel better about the price you feel is right to pay for the security.
Taylor Schulte: All right. And then finally, what the heck is a SPAC?
Caleb Silver: Oh, SPAC is the term of the year of 2020 for Investopedia. These are special purpose acquisition companies. A lot of times people refer to them as blank check companies.
These are private companies form with the sole purpose of finding another company to target in an acquisition and take it public. And as an investor in a spac, you have the right to buy shares of the SPAC or shares of the target company once it takes it public. Or you can buy what we call warrants, which is the right to buy stock at a later date.
So it's a great way to access companies and you're seeing a lot of these SPACs formed around the hot areas of the market. So electric vehicles, you see 'em in space travel, you see 'em in cannabis and in DraftKings, the online gaming site when public via spac, it's a faster way for a company to get public through this vehicle called a special purpose acquisition company or SPAC as it's known.
And it gets them public a lot faster than the normal routine that companies go through in the I P O process. And for investors it's a way to access those markets and those companies that would've taken years potentially to go public if they ever made it.
That said, there's a ton of risk in SPACs because the private company that is acquiring the company that intends to take public has a period of time in which to do that, it's a year or two years and they have to get it public or return the money to you.
Plus some of the ownership structure of these SPACs is not really that much in favor of the retail investor, but they are very volatile. They have been very hot. So it's a hot part of the market that everybody was talking about and every celebrity has one now and we may have seen the bubble on this one.
Taylor Schulte: Yeah, it is a fun topic. I'll have to dedicate a whole episode to talking about them, especially since it sounds like WeWork might be going public here through a spac, so that'll be interesting to watch.
Caleb Silver: Yeah, absolutely.
Taylor Schulte: Listeners can obviously hear your passion for financial education, your extremely knowledgeable around a lot of these different topics. If people want to hear more of you and your knowledge and the things that you're doing in Investopedia, they can listen to the Investopedia Express podcast, maybe talk to us about what that podcast is, where they can find it, some of the topics you cover and all that good stuff.
Caleb Silver: Thanks. Yeah, the Investopedia Express is a podcast I put out every Monday morning and it's really set up as a setup for the week. So what the, what I call it is what the educated investor needs to know to start the week.
And that could be, here's what's happening in the markets, here's what's happening in the global economy, here's what's happening this week. I talked about the infrastructure bill that President Biden just put out there and what that might mean in terms of government spending and what sectors might benefit.
So it's a setup, it's a, here we are, here's what's gonna be happening this week and how to think about it as an educated investor and a conversation with somebody in the industry that's touching an interesting part of it.
And that could be an economist, a Nobel Prize winning economist, like Joe Stiglitz. It could be a strategist, an equity strategist at one of the big investment banks. It could be a financial advisor or planner that speaks the language of retail investors. Or it could be a rapper like Cassius Cove, rapping about SPACs, who I had on the podcast recently.
So it's a fast one. We call it the Express because it's fast, 25 minutes or less and it's every Monday morning and I have a lot of fun doing it way too much fun doing it. And I would love it if folks would check it out, give me some feedback.
Taylor Schulte: Of course, yeah, I will link to the podcast in the show notes. Everybody can find it and check it out and tune in. Caleb, I really appreciate not only everything that you do for financial education in the consumer space and the advisor space, but I appreciate you coming on this podcast today, and sharing some of your knowledge and some of the history behind investopedia.com.
So thank you very, very much. Is there anything else that you'd like to share? And maybe, if not, where can people find you?
Caleb Silver: I am easy to find. I am @CalebSilver on Twitter. You can find me on LinkedIn. My name and my bio are all over the website and the podcast of course. And I try to get out there a lot. And what I really love is hearing from our readers and from our followers and we have a great dialogue going with them.
So it's been a real honor to be the editor-in-chief of Investopedia and I've really enjoyed talking to you and getting to know you Taylor. So thanks so much for having me.
Taylor Schulte: Absolutely. Thanks again, Caleb.
Episode Disclaimer: This podcast is for informational and entertainment purposes only and should not be relied upon as a basis for investment decisions. This podcast is not engaged in rendering legal, financial, or other professional services.