Stock Market????

Question

I have tried so many times to make sense out of the stock market. Read some books and listened to others even watch some presentations.

For some reason or another I just do not get it???!!!

I am, I believe very humbly an intelligent guy. I sort of understand some parts of it.

Is there anyone that can help me understand this?? I mean all of it from the whole idea to what is actually taking place and what the job of a stock broker is and all the lingos from Nasdaq to the dow jones and bear market and etc.

How to buy how not to buy, just what the whole thing means.

I do not want to do anything with stocks and such, I would just like to know what all the fuss is about, and I would love to be able to understand this!!

Please help anyone, give me your own words not some link or some copy paste, I can find that for myself.

Will post this question twice, the best answer will recieve both best answers, equaling 20 points.

Thank you in advance.....

Answer 1

What is this "ALL" about?

Everything? Tough question. lol. A bit interesting to consider though.

I think maybe you "don't get it" because you are trying to get a grip on the whole thing when it is really a compilation of parts, many many parts.

You already got a good answer on the "mechanism" of what is going on but not yet on the "why?".

First you must make the distinction between "investing" in stocks, in companies, and "speculating or trading" in stocks.

With an investor they are buying a "share" of the future profits of a company. Traders are buying stock based on price they expect to go up, generally in a short time.

In both cases it is about the future and the future is unknown. That is why nobody can tell anybody exactly "what" or "when" to buy. But many ask here. And all of us are trying to guess and want to know. But there are never any hard answers and that is part of what makes it so enticing.

What is the "fuss" all about? Simply it is MONEY.

  Economies are affected or you are affected by them. In a big sense governments can rise or fall based on that money. Elections are changed or influenced. It affects everything. And you are a part of that.

  Fortunes are made or lost.  And lives are changed for the better or worse.  

I learned long ago most people work for their money but once earned fail to make their money work for THEM.  Investing is about making your money work for you.

People make all sorts of choices in life. Investing is one of them.

And stocks provide the highest returns. But the risk can also give losses. The fuss is trying to stay on the correct side of that.

And sometime the thrill of a rising stock makes people irrational. They seem to play an odd game of musical chairs. Where the chairs represent pocketing big profits. At any time you can take your chair and sit down but for less money. Then there is one less chair but the music plays on and many people keep walking around the chairs watching the money grow.

But when the music stops there are only a few chairs and only that sit down first get the money, the rest lose.

Taking that risk is part of the "fuss". That would be speculating.

On the investment side, people take measures to reduce the risk and get average returns. They diversify. They balance between stocks and bonds and rebalance. They seek to eliminate risk, not profit by it. For the most part that can be done.

Bottom line, stocks allow you to participate in the majority of business done in the world and your fortunes become tied to the fortunes of in what you invest.

The fact you say "I do not want to do anything with stocks and such" Is probably a big reason you don't "Get it". You don't have any money at risk. You don't benefit from a good decision or lose from a bad one.

When you get to where stocks soar by a 1,000 points in a month and that means a new Porsche for you. Then you will "get it". ;)

Good Luck at grasping what the fuss is about. Put some of YOUR money in the market and I think your grasp will change.

Answer 2

Well at its heart the stock market is nothing more than an auction. It is a place whee companies come to get captial for expansion from investors by selling shares in the business. So when you buy shares you are investing in their business.  

The price of the shares is determine through an auction process which matches buyers and sellers. Prices move higher when there are more buyers and prices move lower when there are more sellers. The current price is the price at which there are and equal amount of buyers and seller nothing more. This whole process takes place either through computers or through a specialist ont he floor of exchange.

Stockbrokers do exactly what their name implies they sell stock and investments to people and they are not really necessary for the function of an exchange. The people that are necessary are traders, which are the people you see actually yelling and screaming on the floor or more commonly they are behind computers. These people actually buy and sell stocks for themselves and for others (like the firms that hired them). Its their actions that move the prices of stocks.

Now as for the actual movements of prices they are based onthe actions of people (the traders) and their expectaions for profit or loss and their fear and greed. Sure there are economic fundamentals that drive prices like earnings and a booming and productive economy, but this human part is also a big part and ts hard to quantify. All of these factors are reflected in prices and that is why its soo dificult to predict movements in the market place.