People have invested in the stock market for one reason: to make money with their money. As opposed to having money sitting under the mattress or in a savings account, owning stocks generally have performed well over the long run. When you purchase a stock, you exchange money that is equal to the number of shares times the share price for fractional ownership of the company who issued the stock. If the company continues to grow its earnings over time and becomes extremely profitable, you benefit as a partial owner. This is exactly what stock holders are looking for. Investors want to purchase those companies who already have stable, growing earnings, or those companies that have the potential to earn a lot of money in the future. As opposed to investing in a company's bonds, in the long run, stock holders benefit from higher returns that compensate them from taking on the risk that the company does poorly. This is known as the "equity risk premium" and is why over the long run, stocks post higher returns than bonds.
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Every successful investor has a basic understanding of the stock market and how it works. In the next few paragraphs we provide an overview of the stock market for beginners and show you how to trade stocks. The stock market for beginners can be a tough place and we are going to give you the tools necessary to survive. The Stock Market For Beginners: Introduction A stock market, by definition, is a private or public market for the trading of company stock and derivatives of company stock at an agreed upon price. The main function of the stock market is to enable trade in the shares of public companies, which in turn reflect the performance of the companies whose shares are traded in the stock market. The stock market in the United States consists of the trading of all securities listed on the New York Stock Exchange (NYSE), the NASDAQ, the American Stock Exchange (AMEX), as well as on the many regional exchanges such as the OTC Bulletin Board and Pink Sheets. |
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