Basics of Equity

Learn before you invest. Owning equity means owning a share of a business — with everything good and bad that follows from that.

What you are buying

A share is part-ownership of a company. Its value follows the company's earnings over the long run and market sentiment over the short run. The second is much louder than the first.

Why horizon decides everything

Equity has historically rewarded patience and punished urgency. Money needed within three years does not belong in equity, however good the opportunity looks.

Concentration and diversification

A concentrated portfolio can outperform substantially and can also lose substantially. Most investors are better served by breadth — through index funds, a managed portfolio, or simply owning more names.

The honest risk statement

Equity investments are subject to market risk. You can lose money, including a large share of it, and there is no guaranteed return of any kind.

Before you decide

Everything above is general. What is right for you depends on what you are protecting, what you already hold, and what you can sustain. That is a fifteen-minute conversation, and it is free.