Stock Basics
Conclusion
Let's recap what we've learned
in this tutorial:
- Stock means ownership. As an owner, you
have a claim on the assets and earnings of a company as
well as voting rights with your shares.
- Stock is equity, bonds are debt. Bondholders
are guaranteed a return on their investment and have a higher
claim than shareholders. This is generally why stocks are
considered riskier investments and require a higher rate
of return.
- You can lose all of your investment with
stocks. The flip-side of this is you can make a lot of money
if you invest in the right company.
- The two main types of stock are common
and preferred. It is also possible for a company to create
different classes of stock.
- Stock markets are places where buyers
and sellers of stock meet to trade. The NYSE and the Nasdaq
are the most important exchanges in the United States.
- Stock prices change according to supply
and demand. There are many factors influencing prices, the
most important being earnings.
- There is no consensus as to why stock
prices move the way they do.
- To buy stocks you can either use a brokerage
or a dividend reinvestment plan (DRIP).
- Stock tables/quotes actually aren't that
hard to read once you know what everything stands for!
- Bulls make money, Bears make money, but
Pigs get slaughtered!
Whew! Seems like we covered a lot.
We hope that this tutorial has given you a good idea of what
stocks are and how the stock market works.
|
Previous
