What is the stock market? Well in simple terms it is, a market for the trading of company stock, and derivatives of the same. Participants in the stock market range from small investors to large hedge fund traders. It doesn't matter who you are, if you are willing to learn the basics and make some money, the stock market is a place that you should investigate further. Many years ago the stock market was overrun with individual buyers and sellers, but now in days the market is more institutionalized, with an assortment of companies and business firms. Some people have been trying to master stock trading for decades, but few have truly got it down. Many people believe that with a few courses and a few books they can make vast amounts of money in stocks. In most cases, that is not true. In order to make money, sometimes you have to lose money. Face the fact, if your in the stock market you will lose money, often or occasionally, depending on your knowledge of how the market works. To understand stock trading, you have to understand what stock is. A share of common stock bestows the owner of that share, with a fraction of what is left over, after all other stakeholders in a business have been paid. Basically, that means that after everything important that keeps the business, that you have invested in, running has been paid for, you will get what is left in the revenue. The revenue is used to pay for raw materials, employee wages, energy, supplies, and pays interest on borrowed funds. If a company is managed poorly, the revenue that is left over for shareholders could be quite low, or even negative. If it is run smoothly and doesn't hit many bumps in the road, shareholders may be left with a great deal of money. The last person in the line to be paid is the common shareholder. Raw material suppliers, bondholders, employees, etc. are on the top of the list to be paid and will be paid with available funds. Because the shareholder is last, they are entitled to more money then the bondholder and so on. That is the reason the stock market is set apart from gambling, as it is so commonly compared to. The fact is that the stock market is quite different from gambling. If you were to buy a group of stocks and keep them for a duration of 50 years, odds are they are going to increase in that time. It is true that it will fluctuate, but experience has shown that the stock market shows gradual increase over gradual decrease. Your portfolio will have gained in value, all the while no one has lost money. Unlike in gambling, where the winner has the losers money. The loser has shown a loss, while the winner has gained a profit. That's why stock and gambling are different, and should not be compared nearly as often. Well if you are interested in learning more information on stock trading, you simply need to look for it. There is an arsenal of websites and books out there that are waiting for you, so get started. |
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