New investors should always be working on their stock market lingo, and one key way to gain credibility in any conversation is to always talk about results by using percentages over whole numbers. Not only does it sound professional, but it is also the most accurate.
Learn to only talk percentages, not numbers, when speaking of investment results.
Investors should only percentages to relay returns and success. Why? It is all relative to the numbers. For example, an investor who makes $100 in a day from a $1,000 portfolio has a 10% return overall, but that same $100 profit from a $10,000 portfolio is only a 1% return.
Percentage returns are not limited to just a single trade and can be also used to compare monthly, quarterly, yearly, and even multi-year results. The S&P 500 for example is the benchmark of all major financial institutions including mutual funds, hedge funds, etc. When these institutions discuss their yearly returns they always relay their numbers in percentages, not raw numbers.
Correct Lingo: “My overall portfolio last year returned 15% compared to the S&P 500’s 3%.”
Incorrect Lingo: “I made $10,000 last month.”
Percentages are the market standard when it comes to relaying investment results, and if investors want to be heard in a conversation then percentages are the only path to prosperity.