We've all heard of the stock market and probably have a general idea of what it is and how it works either from high school economics classes, television financial reports, and the countless film depictions of what happens on the floor of the New York Stock Exchange. But how does it really work and what is meant by "playing the stock market?"
The Stock Market in a Nutshell
Companies sell shares of stock as a means of raising capital. For example, let's say that the XYZ corporation, makers of the finest whatsidoos and thingamabobs in the country, wants to open a new factory. Doing so will require a hundred million dollars. The company can get a loan from a bank, but it would wind up in debt. So, instead of borrowing, it decides to offer additional shares of stock. As investors purchase the stock they are giving the company the capital it needs to do business. In return the stockholders actually own a part of the company and have some say in its activities. If XYZ does well in the thingamabob market, its stock will raise in value as more people will want to have a piece of XYZ for themselves. If it doesn't do so well (maybe it gets undersold by the Ichi Nee company, a Japanese conglomerate that has found a way to make smaller, cheaper thingamabobs), less investors will buy the stock, current stockholders may try to sell, and the value of the stock drops. The price of individual stocks will rise and fall several times a day. The price for a certain stock you may see on the evening news for any particular company represents where the stock was valued at the end of the business day. It will also tell you whether that price rose or fell from the previous day. It can be enough to make an investor tear his hair out. Didn't you ever wonder why nearly all economists are bald?
"Playing" the Stock Market
You may have heard people refer to "playing" the stock market as if it were all a big game of Monopoly. This is an adequate term because that's exactly what some people do, but the game is more like Roulette ? sometimes of the Russian variety. People who "play" the market typically invest for short periods of time in the hopes to get a quick return. They will buy some stock, wait fro the price to go up, then sell right away and invest in another stock and await the next profit. They may do this several times a day in some cases as prices fluctuate. This can be a very risky way to behave because a lot of money can be lost, but a lot can be earned as well. It's almost like a trip to Vegas without Wayne Newton.
Investment Tips by Mika Hamilton ? Read more free investment tips, tutorials & reviews at http://www.global-investment-institute.com
shuttle from Midway Glen Ellyn ..What account size do I need?How much money can I... Read More
There is a famous cliff on the ocean in Acapulco... Read More
"There is nothing more frightful than ignorance in action!" Johann... Read More
Having lived aboard a sailboat for 2 years I was... Read More
With an insecure job market, overworked employees, insufficient retirement savings... Read More
You've decided to try your luck at trading stocks or... Read More
Much like the middle child, mid-cap stocks have long struggled... Read More
During the day I watch CNBC-TV, the stock market channel.... Read More
Every publicly traded company is required by the SEC(Securities and... Read More
(1) CHK stock price $16.74, NAV $32.5CHK is my favorite... Read More
It depends on your level of understanding of the market... Read More
Investing in long-term financial vehicles give you the most gains... Read More
The World Bank claims that some two billion of the... Read More
We are already in it, but you can't see it.... Read More
You remember the story about the frog that was put... Read More
When it comes to buying a stock or mutual fund... Read More
For some "long term" would mean holding a stock position... Read More
This is the continuing story of our two imaginary traders,... Read More
Refuse is a serious issue in any society, about as... Read More
What a great statement!I just heard someone use it in... Read More
I made my very first investment in the stock market... Read More
Mutual funds and brokers are always preaching not to buy... Read More
Intervention. Now don't let that big word scare you. The... Read More
I constantly hear the talking heads on CNBC-TV, the radio... Read More
Money management starts with protecting your capital, realizing profits and... Read More
shuttle from O'Hare North Chicago ..It is finally catching up with them. The brokerage companies... Read More
I mean it when I say that. While plastic silverware... Read More
It looks like the market is ready to start up... Read More
Sidney felt sick as she looked at her latest OptionsXpress... Read More
Hedge current portfolio positions and gain access to capital resources... Read More
The thinking process of the brain relating to the... Read More
Are you attracted to the idea of being in control... Read More
Wouldn't it be nice if you were only in the... Read More
Do you have a financial planner? Does one of your... Read More
The single most expensive stock market trades are those made... Read More
The stock market often closes a week in the middle... Read More
Ever notice how behavior in one area of life can... Read More
Even if you don't own any of their stock or... Read More
On the 40 year journey through the turmoil of a... Read More
The big bad bear is stirring again. So far he... Read More
Financial markets provide their participants with the most favorable conditions... Read More
Do you have a nest egg? You know, a place... Read More
The Bollinger Band theory is designed to depict the volatility... Read More
Well maybe that's overstating it a little, but it's certainly... Read More
Checked your 401K lately? Going back to about a year... Read More
I cringe every time I hear a novice investor tell... Read More
What is the Series 7 Exam? If you... Read More
When it comes to stock market trading it PAYS to... Read More
Sometimes the best way of lowering exposure to risk is... Read More
You probably know the story of Sherlock Holmes and the... Read More
Stocks & Mutual Fund |