Categories

Investing

Tools

  • Economy & Politics
  • Investing
  • Personal Finance
  • Related Posts


    This Tech Startup Uses A Simple Formula To Decide How Much Stock To Give Employees
    Your Precious Chipotle Burrito Is About To Get More Expensive
    Million-Mile View Of Investment Value
    Why Beating The Market Is An Uphill Skate
    Shipping Firms Turn To Equity Markets As Sector Eyes Recovery
    3 Big Retail Trends To Watch For
    At Macy’s, Lessons From Walmart’s Failed RFID Attempt
    Welcome To The Unfriendly Skies
    Is Bitcoin Like High-Speed Trading?
    Meet The Guy Who Helped Add $2 Billion To Twitter’s Valuation Yesterday
    Bank Of America’s Legal Woes Are Only Partly To Blame For Its Disappointing Quarter
    Metals Stocks: Gold Wavers, Copper Edges Up After China Data
    The Best Online Tools To Track Your Investments
    How To Profit By Avoiding Common Investment Errors
    Beware Of The Walking Dead In Your Portfolio


    A Stock Market Primer

    The stock market may seem out of the reach of beginning investors. But by understanding just a few basics, anyone can be on their way to mastering the market.

    In gaining a better understanding of anything, it often helps to break things down to their most basic elements.

    What The Heck Is A Stock?

    Seasoned investors reading this article probably find it funny that anyone wouldn’t know what exactly a stock is, but this is an article for beginners.

    Stock is how a public company is collectively owned. Each share of stock that is bought and sold by investors represents a tiny fraction of the business.

    An example of stock on a small scale would be 10 people forming an equal partnership to open a bakery; the bakery could be considered to consist of 10 shares. If the company earned a profit of $20,000, the earnings per share would be $2,000.

    It is up to the shareholders how they will reinvest the profit. They could pay themselves or use the money to grow the company. One owner may decide to sell his stock in the company and get out of the business, or another may want to buy a portion of one of his colleagues’ stock to hold a bigger stake in the company.

    The same basic idea applies when thinking about the structure of a modern corporation, except instead of 10 shares, there could be billions. A company may elect to “go public” and be traded on the stock market to increase funding for growth.

    To make sure the shareholders are represented in the company, they can vote to elect people to the company’s board of directors on an annual basis. Leadership, like the chief executive officer and other top management positions, is then appointed by the board.

    Stock Is Bought And Sold On A Stock Exchange

    Because modern corporations can be broken into so many shares of stock owned by different people, buying and selling shares in an informal manner would be difficult. That is why dedicated stock exchanges like the New York Stock Exchange (NYSE) on Wall Street, NASDAQ, the London Stock Exchange and the Tokyo exchange exist to provide a marketplace for the transfer of stocks.

    Where Do You Start If You Want To Buy And Sell Stocks?

    There are a number of ways to get started in the stock market, and there is no best option for everyone. Determining your best method of investment depends largely on whether you want to pick individual stocks, how much money you can invest and what your goals are.

    1. A stock broker can act as a middleman between you and the market, provide investment advice and help you plan for the future. But that will cost you; and, if you aren’t careful, those brokerage fees can add up fast.
    2. Direct Stock Purchase Plans are vehicles for investment for people who don’t have or want a traditional brokerage account. For the beginning investor, that often means that the stocks can be bought and sold directly without paying hefty commissions that often accompany the services of a stock broker.
    3. Mutual funds don’t allow you to buy individual stocks, but rather give a group of investors the opportunity to put their money together and buy shares of many companies in one big fund.

    Discuss this Story:

    Comment Policy: We encourage open discussion. Comments including racist statements, profanity, name calling or spam will be removed at our discretion. We use filters for spam protection. If your comment does not appear it is likely because it violates the policy.

    SodaStream Pops 11% On Minority Stake Sale Buzz
    Yahoo Shares A Good Buy As Alibaba Nears IPO: Analysts
    Mrs. Fields Looks Beyond The Mall
    Europe’s Gentle Clampdown On Flash Boys
    Do You See A Bubble?
    Homebuilder Confidence Misses For 4th Month In A Row
    Stocks Move Higher On Encouraging Profit Reports
    Here’s How Box Can Still Go Public In The Midst Of The Brutal Tech Selloff
    Stocks That Go Up Can Keep Going Up
    Nestle Reports Slow First Quarter
    China Gold Demand ‘On The Rise’
    Don’t Just Sit On Your Investments, Do Something
    Should Google Know Your Deepest Darkest Secrets?
    How Companies Are Using Wearables In The Workplace
    Is This Tiny Gadget The Future Of Smoking?
    Commodity-Backed Currencies? China Buys Huge Copper Mine; Russia Onshores Largest Gold Miner
    BofAML Warns VIX Complacency Suggest Stocks Fall Further
    Futures Tread Water As Geopolitical Fears Added To Momentum Collapse Concerns
    “Shadows Of March 2000″ – Goldman On The Great Momo Crash Of 2014
    Weekly Sentiment Report: Horrific? Hardly!
    Beta Earthquake
    Gold Jumps To 3-Week Highs, EUR Fades As Tensions Rise In Ukraine
    CME Sued For Giving “High-Frequency Traders Peek At Market” Since 2007
    HFT Purge Begins: SEC Prepares To “Remove” Some High Frequency Trading Firms
    GE Capital Seen Ripe For More Slimming After Credit Card IPO
    Ukraine Tensions Land Fresh Blow On Struggling Stocks
    China Targets Trust Firms In Shadow-bank Crackdown
    Citigroup Cuts 200 To 300 Jobs
    Stocks Face Earnings Blues After Tech Slide
    Europe’s Top Banks Cut 80,000 More Staff In Post-Crisis Overhaul
    Read more from Investing...

    Liberty Investor Digest

    Get today's most important
    financial headlines all in
    one place by email!



    Sources


    close[X]

    Sign Up For Liberty Investor Digest™!

    Get Liberty Investor Digest FREE By Email!

    Input your name and email address in the fields below and get today's most important financial headlines sent straight to you inbox!

    Privacy PolicyYou can opt-out at any time. We protect your information like a mother hen. We will not sell or rent your email address to anyone for any reason.