What Tha Finance?! : Futures

I know that you are looking at the title of this edition of What Tha Finance and a bit confused. I’m not talking about Future Hendrix or Future Vandross. While he might be a bit toxic, this term within investing can give you the tea about what will be in the market before it opens. Futures are like giving you a heads up about the future date and price of said stock/fund. 

What that means for you is to simply know what to potentially expect when the markets get jumping. What this means for you is that when you see articles/posts talking about the ‘futures’ are rallying up, you can expect the markets to potentially be up when the markets open. On the other hand - when ‘futures’ are down, you could potentially expect some down trend (down). Learning about key terms like this will allow you to find balance in investing beyond the swipe.

If you remember back on the last edition of WTF when we talked about ETFs and the types there are. Within “Futures”, there are even different types of these -

• Commodity futures  - Oil, Natural Gas, etc

• Stock Index futures - like for S&P 500 Index

• Currency futures - Foreign Currency, like Euro and Pound

• Precious Metal futures - like Gold and Silver

• U.S. Treasury futures - Bonds and other products

Here is a more tactical example: An airline company wanting to lock in jet fuel prices to avoid an unexpected increase could buy a futures contract agreeing to buy a set amount of jet fuel for delivery in the future at a specified price. For some ‘futures’ can be seen as speculation, but watching these lets you know rather to expect ‘Pluto’ or the pits when it comes to your portfolio/watch list.