So, What is This Stock Market Thing Anyway?






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

 Continue for more related information:
RELATED RESULTS:


 

Stock Market Investments
If there is one term over-used when talking about makinginvestments in the stock market I would think that termwould be: buy low, sell high....

How To Pick A Mutual Fund
Mutual funds by definition are a mixed bag of stocks, bonds and a little cash. Their price per share is the NAV, Net Asset Value of the tot...

Who Knows?
The Shadow knows. Remember him? It seems a shadow has a firm grip on this stock market. Since the terrible break in mid-April we had a rally and then a de...

DIY Portfolio Management
Exchange Traded Funds (ETFs) are growing. Investors are choosing low annual expense and market return over high annual expense and promised ...

Overseas Investing: Going Against the Mainstream
TOO OFTEN, INVESTORS SIMPLY CHOOSE TO follow the crowd. This strategy works in the short term, but can lead to diffi...

Kick The Tires
Before you buy another car you walk around the lot, kick the tires, slam the doors and look at the mileage indicator. That's an odometer. I know. That...

Mutual Fund Ball and Chain
The broker told me not to sell because the mutual fund I owned had a 2% redemption fee and they would penalize me if I did. ...

Big Buildings Can Mean Big Economic Disaster
AS BUILDERS BEGIN WORK ON THE FREEDOM TOWER in New York City, to be the world's tallest building, economist Mark Thornto...

The Value of Stocks of a Company
The debate rages all over Eastern and Central Europe, in countries in transition as well as in Western Europe. It raged in Britain d...

Mindset
In 1960 an engineer working for a watch company in Switzerland discovered that a small crystal would vibrate at a constant rate. He found this was so accurat...
Table of Contents | Article-Max Directory