Explain the Stock market to me in simple terms Please.?

Question

I wanted to know how it works and how a person can rather not get instantly wealthy but get a large return in profits from investing.

Answer 1

When you buy a share of stock, you're buy a piece of the company, even if it's only a very small piece.

You become an owner of that company along with anyone else who owns stock in it. Each share has a voting right, so you can vote for the board of directors, the auditors and any other issues.

You make money if the company does well, and receives more income than it costs to produce that income. You'll make money either by receiving a dividend, by selling the stock to someone else for more than you bought it, or both.

Companies also have down periods, and could lose money during this time, but only if you sell your stock. You may decide to hold on and wait it out. Look at the people who held on to Apple Computers.

There are a lot of books that explain the stock market. You can find them at your local library.

Answer 2

Okay, well here's the two cents for free:

Stock market is where you sell and buy shares of corporations.

once you buy a share, you own a part of that corporation, and when you sell a share, you sell a part of that corporation.

If you want a large return in profits from investing, then you have to invest a prosperous stock (i.e. corn, trust me, now they're looking for different forms of energy and corn is right on top; the stocks are now cheap, but will jump up in 4 years max!)

---or you can invest (buy shares) in GOLD or other precious metals, the prices fluctuate, but are on a stable high level fluctuation.

Anyway, the profits, which are called dividends, can be better described as this::::

you open up a store, you sell stuff, you make $50,000 a year AFTER you pay all the bills and stuff... Now you have $50,000 extra.. you can either re-invest it, and fix up the store/remodel/etc... OR you can put it in your pocket, take a vacation, or whatever.

IF YOU PUT IT IN YOUR POCKET, then you can consider that a dividend.

if a corporation has alot of excess income, it can either re-invest it into the corp (as i said, to fix it up or make it bigger) OR it can give each share-holder their piece..

---who decides what happens?
whoever has 51% or more of the shares, since they dominate the vote.

Answer 3

The key to investing in stocks and making profits is doing your research and predicting the price of that stock going up in price.
Always buy low and sell high.
There are very savvy traders called day traders that don't wait for maximum gains and don't hold onto their stock very long. They deal in volume trading. They hold a wide variety of stocks in their portfolio (own an assortment of different stocks). Very risky but also has the highest returns on investment for a short period of time.

Here is a book that might help you to understand about supply and demand, buying at the right time, earnings per share and other investment strategies and tips. How to make money in stocks by William J. O'Neil

http://www.amazon.com/gp/product/0071373616/sr=8-24/qid=1151711903/ref=sr_1_24/002-1091128-7644021?ie=UTF8

Answer 4

The stock market is:
---------An Auction
--------- An anticipator of future events, conditions, and emotions.
usually 6-9 months down the road
The stock market is dominated by:
---------Mutual funds
---------Large institutions( Pension plans, Insurance companies, etc
The stock market is driven by:
---------Supply and demand
--------- Estimated earnings
----------Interest rates(present and anticipated)
The price of each stock is determined by:
------------Supply and demand for the shares of that stock
-------------Estimated earnings for that compny
-------------The real or perceived marketplace for that company's product or service
-------------Factors such as
pending lawsuits
questionable accounting practices
acts of God (hurricanes, etc)
product recalls
delays in introducing new products

Answer 5

a whole lot of very loud guys running left and right , yelling like there is no tomorrow ... i think that sums it basically.