What is the Stock Market and How Does it Work?
By D Wood
May 3, 2012
We all hear news about the stock market everyday, we all know whether it is up or down, whether it has had a good or bad day, week or month. We all know fortunes can be made, or lost on it. But how many of us truly know what it is and how it works? The development of personal computers has resulted in more and more people investing their money, from home, in the markets. If you want to become an investor, it is important, therefore, to train in the art of trading. In order to be an effectual investor, you must learn the basics of the stock market.
The very first stock market dates back to the 17th, when the Amsterdam Stock Exchange first introduced and pioneered continuous
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Stocks are the means through which companies are able to raise money. Simply put: Stocks are the shares of a company that the owners sell in order to raise capital. When you own stock, you own a part of the company. A dividend on a share is that share's portion of the company's profits. For example if the company has 10 owners, and it makes a profit of $100,000 in the year, each owner would receive $10,000. The dividends are usually paid yearly.
The value of the share (or stock) will go up or down depending on how the value of the company fluctuates. However, if the stocks go below what you paid for them, you will not loose money unless you sell your stocks at that price. You may well recover from the paper losses when (and if) the value of the stock rebounds. However, always keep in mind that stocks do NOT offer a guaranteed return. You must choose them carefully. It is important to have a certain level of knowledge.
The companies that wish to sell shares must be publicly held. This means they must allow investors (people like you and me) to buy their stocks through an open market. The stock market is that open market. There are two main reasons for a company to want to sell shares. It is the way for a company to raise capital (money) in order to achieve its objectives, such as expansions and improvements, without having to borrow the money. Shares may also be sold when the owners want to reduce their holdings in the company and generate cash
Right now, it is almost impossible for people to see how strong the international commodity markets are. Our parents and cousins and friends, everyone's ears are pinned to what goes on in the market every day of their lives. We need to start teaching more about stock market trading, and with this new expansion of knowledge, we will allow for the market to grow stronger and stronger, but at a steady pace.
The United States signaled a new era after the end of World War I. It was an era of hopefulness when many people invested their money that was under the mattresses at home or in the bank into the stock market. People migrated to the prosperous cities with the hopes of finding much better life. In the 1920s, the stock market reputation did not appear to be a risky investment, until 1929.First noticeable in 1925, the stock market prices began to rise as more people invested their money. During 1925 and 1926, the stock prices vacillated but in 1927, it had an upward trend. The stock market boom had started by 1928. The stock market was no longer a long-term investment because the boom changed the investor’s way of thinking (“The Stock Market Crash of 1929”). The Stock Market Crash of 1929 was a mass hysteria because of people investing without any prior knowledge and the after effects that eventually led to the Great Depression.
What I have learned from the stock investing game: Before playing the stock market game, I honestly had no idea how the stock market works. I, however, have learned so much about the process of the stock market. It was an advantage to learn how to buy and sell stocks without losing anything, that will indeed enable me to invest in the real stock market without any concern. I learned that there is no certainty about winning or losing; however, there are many factors that we should consider before buying or selling stocks. One of these factors is following the daily news about the firm that you are willing to buy its stocks.
January 4th, 1898 was when the stock market was started. Everyone wanted to own part of a business. The way it worked was that the more stock you bought of one company. The more of a owner of that business you were. If that company were to become popular, than the price would go up because more people would want to be apart of owning that business. A bond is a lot different than stocks, Bonds are basically loans. At first the Stock market was conceived as a risky investment, but over time it became stronger and people started to trust it more and more. Pretty soon the New York Stock Exchange was booming with business. When more people started investing the price of stocks started to begin to increase. This occurred first in 1925. For the next year the price of stocks continued to go up and down. Then in 1927 they shot up.
But, if we define stock crash, it is a devaluation of stocks or shares of different industries since their price on the vary day. The devaluation of stocks may goes down from 1% to 50 %. It depends on the time and the parameters. And also we need to know what is the stock market. The Stock Market is a place of commerce where people can come and buy or sell parts of companies called "stocks" or "shares". For example, if you wanted to buy 30 shares of "Hevini Enterprise’s stock for $5.00 a share, you spend $150.00. Then you sell 20 shares to your friend Joe at $20.00 a share. That means that you make a net income of $250. This is the reason that the Stock Market is so popular with investors. This is how investors make their money. A stock is a certificate of a share of ownership in a business corporation, entitling it's owner to dividends, that i...
Another terminology is Preferred stock, which varies in comparison to common stock investors are paid dividends consistently.
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I knew companies issued stocks, and that people could invest in them to grow their money. However, the intricacies of stock prices, ticker symbols, investment strategies, and more are entirely foreign to me. Through the project, I was able to gain valuable knowledge about different types of companies, like technology, their ticker symbols, and how different investment approaches can completely change a portfolio's performance. One of the most surprising aspects to me was the sheer speed of the market.
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Stock Market Buying Strategies Investing in stocks is one of the fastest ways to grow a person’s personal wealth. When buying stock, there are multiple strategies that investors utilize; however, there are only few methods that can contribute to long-term investing. Some strategies are better than others, but having a strategy is better than having none. Buying stock takes time if you’re really wanting to boost your investments, and you have to do a profusive amount of research on the stocks you’re wanting to put your money towards.
When you hear the word, stock market a distaste arises in your mouth. Most people blame the stock market and brokers to be stealers. The stock market for most people is an organization that helps the rich get richer and increase their company revenue. Stating this raises questions to things such as what causes the market to crash then and why does it affect the poor so badly. Also, most people think that the rich people in poor in the stock market get greedy causing the market to crash.
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Have you ever invested in the stock market? If so, do you know where your money is really going? The stock market is a risky business and it can make or break people’s lives. The stock market is used daily to keep America on its trembling feet; it’s also being used at this very moment to cheat people out of money for personal gain. This happens every day in the stock market and its evolving rapidly, super computers that can trade faster than a blink of an eye, social media trends that can predict share values, and intricate stock market schemes that are getting harder and harder to find and take down.