How do stocks work?

Question

I want to further my knowledge on stocks and how to make money off of them. Thanks :D

Answer 1

Companies sell pieces of their company. With those pieces you're entitled to X% of their company, and X% of their profits. When they go down, you go down. When they go up, you go up. For a beginning investor you should pick the most stable companies that will be around for a long time. By the way, this is yahoo... there's a search engine.... many pages with stock info.... JFGI

Answer 2

stocks works ?, well depends on the market , the class of stock & the period . so, if all of them are good or high than stocks will work in a right way.

Answer 3

It is simple actually, and you have done the most important thing, which is to ask the question!

If you start a company, lets say D's Hats, and after a number of years doing well you want to expand that company, you will need money. 2 basic ways you can get money, borrow it, which is what a corporate bond is, or raise money or capital by selling part of your company. If you take in a partner, he pays a lot of money to own half of your company. Or you can go public, that is sell off part of your company to people, that is a stock. When you buy stock you are buying ownership in  a company, it can be a new company like D's Hats or an old established company like McDonalds for example. As a part owner in the company, you get all the risks and rewards of being an owner. New companies routinly put all there profits back into the company so you make money on the stock as it increases in value. Older companine also can increase in value but also take some of thier profits and return it to the owners of the company, they call this dividends.  So when you buy a stock you can make money on dividends and on the price of the stock going up. A lot of companies, will give you more shares in the company as a dividend, some will have stock splits when the price of the stock gets too high to be attractive to new investors. I had a friend that bought $10,000 worth of Microsoft ( MSFT ) back in the 1980's and thru grouth and stock splits wound up with $800,000 worth of MSFT. Not bad, is it.

Answer 4

Before you invest in any security, the first investment you should make is in yourself, and the best investment you can make is by educating yourself.

Start your education by learning why you should invest and the importance of being able to make your own decisions or how the pro’s make theirs.

Here is some reading material that can get you started in the right direction,

The first book you should read is Rich Dad Poor Dad by Robert Kiyosaki

Then try some of these

What Works on Wall Street by James O'Shaunessey

Beating the Street by Peter Lynch

One Up on Wall Street by Peter Lynch

The Warren Buffett Way by Robert Hagstrom

How to Make Money in Stocks” by William O’Neil

Get into the habit of making daily visits to some websites like MSN Money and Yahoo Finance.  (http://moneycentral.msn.com/home.asp http://finance.yahoo.com/ )

While at MSN following the strategy lab analysts to get a feel for what the pros are doing and why.  This site has some basic information for beginners. If any site offers free information, take it.

Other website that can provide instructions and help with procedures and terminology are

Investopedia - http://www.investopedia.com/  Stock Charts - http://stockcharts.com/

http://www.investorshub.com/  http://www.1source4stocks.com/