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.