-The stock market is the market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets. Also known as the equity market, the stock market is one of the most vital components of a free-market economy, as it provides companies with access to capital in exchange for giving investors a slice of ownership in the company.
Read more: Investopedia http://www.investopedia.com/terms/s/stockmarket.asp#ixzz4YnVmJsHO
The stock market can be looked at as the land of opportunity. Throughout the markets time it has changed the lives of people in drastic ways. It can make average people into millionaires, millionaires into billionaires, and it can also take everything from people. It's just how you the market plays. You are gambling with your assets and the methods you take result in your financial future, anything could happen.
Now even if you have never heard of the stock market but you wanna start making future investments today, let me break it down easily:
- The stock market lets investors participate in the financial achievements of the companies whose shares they hold. *that is what we call capital gains*
- When companies are profitable, stock market investors make money through the dividends the companies pay out *that is a direct inflow of cash*
- It's a direct inflow of cash because it goes into your pocket, not back into the stock.
- Now say that you bought a share for $4.00 and now it is at $8.00 you can sell it and make a capital gain of $4.00. Money is greatly made when you do this on a large scale of share buying.
- Now say that you bought a share for $8.00 and now it is at $4.00 and you sell it then you have a capital loss of $4.00 so you'll have to chalk that up as an L and move on.
Example:
January 1, 2017 20 shares @ $4.00 total $80.00
The company releases a new exciting car
January 10, 2017 20 shares now @ $8.00 total $160.00
Now if you are in the United States you are most likely going to trade stock on the New York Stock Exchange; NASDAQ. This was founded in 1971 so you can imagine how much has changed. If you are a individual who is wanting to start trading I say, "better late than never". But really the younger you start the better off you are but you gotta start somewhere, So, you wanna start trading, first you need to start an account for yourself (can use Scottrade.com). Then you want to put money into the holding so when you want to purchase shares you can.
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| Example of your Account balance and the order form for buying shares. |
I won't get much into detail but this is where you study companies and their finical history and you really want to research each company.
Never forget BUY LOW, SELL HIGH. Which basically means you want to buy shares when they are down so you can sell them when they are high for capital gains.
Now I look at buying stock in three standard ways:
- You want to make a quick buck so you would buy low and sell high multiple times in a short period (Day Trading).
- You want to buy stock as an investment so you see the long term potential of a stock and hold onto it for the years to come (Capital Gain).
- You want to buy stock and get a cash inflow while also making capital gains (making cash from a stock without selling) so you look for the dividend payout from a share when buying stocks.
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| Apple has a dividend of $2.08 per share. |
Once you have acquired shares then you have started your own portfolio. So the longer you are in the market the more diverse your portfolio will most likely come!
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| This is a great application to follow your stocks (Yahoo Stocks App) |
This is the most simple form;The next level is a little different:
When I say the next level I mean by different forms of being in the stock market. You can hire brokers from top firms to trade stocks for you and create a unique portfolio (at a cost, there is always a cost). You can purchase mutual funds which are pre-packaged portfolios of most likely fortune 500 companies. Then there is working for billionaire companies who day trade by the heart beat with supercomputers 24/7. Supercomputer actually make up 70% of all trades but yet again only 48% of American own stock. Then there is getting into selling against (betting against) the market (that is how people made a lot of money during the mortgage/market crash in 2008).
