How do stocks work?

Question

How do stocks work and how can you buy stocks? (im asking this question cause in my high school years the teacher we had for economy just played around and really didnt teach)

Answer 1

Wow!

You have some serious reading to do!

I would suggest you start with The complete idiot’s guide to investing!

Answer 2

Great Question!

Stocks represent ownership in a company. Companies issue and sell stock to raise money to build and grow. After that, the stock exists and is bought or sold on various stock markets like the New York Stock Exchange or NASDQ. If a company issues a million shares, and you buy one, you are 1/1,000,000 owner of the company. One important thing to keep in mind. When the company is in trouble, stockholders come last. Creditors who loaned the company money or workers who are owned salaries come first. If a company goes bust, there's usually nothing for the stockholders and the stock is worthless. This happened to me when I bought United Airline stocks.

The value of stocks is generally a function of how the company has performed financially in the past, what it's outlook for growth and expansion is in the future, and also if it pays dividends (a cash disbursement to the owners of the company or stockholders).

Companies will hold annual shareholder meetings where the shareholder's can vote in or out the company management and directors.

You can buy stocks at any brokerage. There are many online and trading is now cheap and easy.

As an example, I purchased shares of Yahoo last week. I really like some of the things they have done recently to make the site better. That includes the new email system that resembles outlook, Yahoo Music, and now Yahoo Answers. I also like the partnering they are doing with AT&T regarding DSL. I think these improvements will keep people at the site longer, doing more things, and therefore seeing more ads and purchasing services. So far, the stock has gone up about $2 per share since buying.

There are lots of strategies regarding when and how to buy and sell stocks. For my serious long term investments, I buy through mutual funds, which are just groups of people buying stocks together through a mutual fund company. I have a small amount of money in a brokerage account to buy and sell individual stocks. That's more for my amusement than any serious attempt at enrichment.

Answer 3

Stocks work on a supply and demand baisis, if an institution bought 10,000 shares of xyz corp on good news, better earnings, or perhaps their industry is a popular one like oil now, the price goes up on the buying interest in that stock. Other side is selling pressure which brings the price down, such as interest rate concerns in the economy, bad news on the company such as they see lower sales or higher prices to make their product, etc, or the former buyers want to take profits on this paticular investment.
As a share holder you do have a partial ownership in the company, which only means you usually get voting rights of 1 vote per share. You, as a common shareholder are on the bottom of the line as to what you recieve if the company would go bankrupt, so if you do invest in stocks then take the time and do research on your company and find out how it is doing, really easy to do just use Yahoo finance and look into any company you are interested in.
As far as buying and selling stocks, just choose a discount broker if you are actually doing the investing at Scottrade or Charles Schwab, etc.

Answer 4

Apple. they are top proper now but when your time period is past january they are a no-brainer. Did you already know the iPhone used to be the largest promoting cell within the US final month? That, and it is implications, isn't but priced in.. and nor is Apple's marketshare being on the tipping factor and approximately to blow up. 185 now. 240+ through Jan.. (and if you are fortunate you will get a dip to shop for at a160 inside the following couple of weeks).

Answer 5

There is some good info here.