Can someone explain the basics of the stock market?

Question

I really just don't understand exactly what it is, and I feel like I should since a large portion of my money is invested.

Answer 1

read stock investing for dummies

Answer 2

Stock is an ownership interest in a company, also known as “shares” in a company. When you own stock in a company, you are a shareholder and may be entitled to receive dividends if the company is profitable.

If you are new to the stock market, some research is necessary to be done on your part.

Try the below url:

http://www.sogotrade.com/help/faq.aspx.....

For New visitors, it has extensive information available like:

How do I get started?

How do I fund my account to buy stock?

and Investing section gives information like:

How does the stock market work?

What are the risks and advantages of investing in the stock market?

How do I choose what to buy?

What are some tips for beginning investors?

The following tutorials might be helpful to you:

Definitions: http://www.sogotrade.com/Help/Glossary.a...

http://ezinearticles.com/?Stock-Investin...

http://ezinearticles.com/?Things-to-Know...

http://ezinearticles.com/?How-To-Buy-Sto...

Answer 3

Listen to the Financial Sense Broadcast on http://www.FinancialSense.com

These people have educated me about the stock market even though I have been investing for over 19 years I still learn stuff I never knew by listening to their broadcast every weekend.

Excellent information.

Answer 4

Create/Make

Buy

Win money

And the cycle repeats

Answer 5

What Stephen said is the basic idea of how it works.

Share prices are speculative (a good reporting typically increases the share price and not necessarily the earnings report), ie what happened about 10years ago with the dotcom boom.  No one can predict what will happen on a day to day basis, so if someone says they can that means they can read the future.

Answer 6

Companies are divided into shares.  If a company has 100 shares and you buy 1, you own 1% of that company.  A thousand shares .1% etc.

You are buying the companies present worth + future earnings potential.

Answer 7

Think of the stock market like a huge market stall where you got to buy goods you want and where you can barter on the price. The stock market allows companies listed on them to raise capital which is very important and a lot of these companies help us and the global economy with our daily lives, be it from eating and drinking to shaving etc. We can buy or sell companies shares with stock brokers or specialised leveraged betting firms. There is nothing we as private investors cannot have access to in terms of all the companies and asset classes out there so we have huge choices. The important thing to consider here is that buying one companies’ shares is the riskiest thing we can do as investors as we are solely betting on that one company to do well. A much better approach is to have a “diversified” approach and spread our money over different companies and different types of assets so we can eliminate some of the risks to our money. We would normally do this by way of certain funds or tracker funds which invest in many different companies.

Disclaimer:

The answers above are for guidance only and should not be acted upon without you receiving independent financial advice relevant to your circumstances.  To find and IFA please call 0800 085 3250 or go to http://www.unbiased.co.uk.