Lesson 1: The Market
Many people jump straight to stocks through stories, charts or indicators without understanding what a market is. That’s how you end up reacting to price instead of understanding it.
Markets aren’t random, but they are driven by expectations, positioning, and human behaviour.
This lesson gives you the mental map.
What is a market?
A market is simply a place where buyers and sellers agree on a price. That’s it!
Prices move because:
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Buyers are more aggressive than sellers (price rises)
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Sellers are more aggressive than buyers (price falls)
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Or neither side cares enough (price goes sideways)
What is a stock?
A stock is a share in a company.
When you buy a stock, you’re buying:
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A claim on future cash flows
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Exposure to how the market perceives that company’s future
Important distinction:
Stocks don’t move on facts. They move on changes in expectations.
That’s why “good news” can still send a stock down.
What is a fund?
A fund is a basket of investments.
Instead of owning one stock, you own:
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Many stocks in one structure
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Managed either passively (tracking an index)
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Or actively (trying to beat an index)
Funds exist to:
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Reduce single-stock risk
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Provide diversification
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Outsource decision-making
Our goal here at FoundryStrat to encourage individuals to build their own portfolio of stocks and build wealth for themselves - but funds can still compliment your overall portfolio. This isn't for everyone though. Selecting individual stocks carries higher risk, it takes time to build understanding and confidence.
Stocks vs Funds...
There’s no “better”. There’s only appropriate.
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Stocks
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Higher upside potential
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Higher risk - downside potential. You can lose all your money - unlikely with a Fund
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Requires time, judgement, and discipline
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Funds
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Smoother returns potentially
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Lower decision burden
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Ideal for long-term compounding
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Most people should own both. When you're starting out, it can be good to own Funds. As you build your understanding, adding individual stocks can really help compound your wealth, or destroy it, if you make the wrong decisions.
Why prices move?
Prices move because of:
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New information
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Changing expectations
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Liquidity (how easy it is to trade)
What doesn’t move prices reliably:
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Opinions
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Headlines without surprise
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“Everyone knows” information
Markets care about changes to what is currently understood. As expectations change, price changes.
Why timeframes matter?
A market can be:
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Bullish (going up) long term
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Choppy (going sideways) medium term
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Bearish (going down) short term
All at the same time.
That’s why people argue endlessly about direction, they’re often just looking at different timeframes.
What's biggest beginner mistake?
Thinking markets are:
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Fair
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Rational
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Or designed to reward effort
They aren’t! Trust us, we've done the hard yards. For well over 20 years we've been studying markets.
Markets reward:
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Discipline
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Risk management
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And patience
Skill shows up over time, not trade by trade.
What’s next?
Now that you understand what a market is, the next step is learning how markets show information.
That means charts...