could any one of you explain the stock market to me? my history teacher used an analogie to explain it ("its like legalized gambling, thats all you need know."), but i need more! explain it in words or an analogie for me to understand.
2006-10-24 03:43:11 · 9 answers · asked by jo_z_rox2011 2 in Business & Finance ➔ Investing
I came up with this analogy a couple months ago with my investment pool: Think of the stock market as a huge SUV. This SUV is driving through the streets of a very dangerous neighborhood. In order to get out of this neighborhood the SUV has to drive through a brick wall. This SUV holds all stock investors. In the neighborhood are other investors who deal with the commodities and futures exchanges and anything else (oil, orange juice, interest rates, etc.). These other investors are shooting bullets at this SUV as it passes through the neighborhood to get to the brick wall. This brick wall represents the key threshold that the major indice(s) need to break through to signify a true bull market. All of the bullets represent the impact that oil prices and geopolitical events have on the success of the SUV getting to the brick wall. Because there are ranges in the major stock indices, the SUV drives into the brick wall for the first time, signifying the first time it has reached its high range after a recession. It reverses and runs into the market wall. Its retreat backward signifies the low range it goes towards. The SUV keeps reversing and accelerating to tear down this wall until it eventually gets through. When it gets through, it's a true bull market. How do we get back to recession? All of the people from that bad neighborhood are now able to get the other side because that SUV made a path for them. They eventually catch up with those in the SUV (stock investors). They bring them back to the bad neighborhood and take them hostage for a while (could be years before they get out).
2006-10-24 05:18:41 · answer #1 · answered by Anonymous · 0⤊ 0⤋
I agree with your teacher. Legalized gambling is the easiest way to explain the stock market.
However, the best way to describe the stock market is like a casino that has to tell you which slots are going to pay off.
You see, the stock market is filled with companies, some bad, most good. Every company has to tell you how they're doing every 3 months or so. After the reports come out you can choose your "slots" or stocks and play them.
Hope this helps.
Graciously
The Investing Sensei
http://www.investingsensei.blogspot.com
If you have any other questions, comments, or concerns you can contact me at:
My Site: http://investingsensei.org
Email: johnny@investingsensei.org
I found these sites helpful when I started investing:
http://investopedia.com
http://investingsensei.org
http://barchat.com
http://finance.yahoo.com
http://cnn.com/money
2006-10-24 09:57:58 · answer #2 · answered by Johnny B 2 · 0⤊ 0⤋
How about this.
The stock market is where people can buy and sell ownership of public companies. It's an auction house. The owner of the stocks asks for a price and others will make an offer, when an agreement is met the stock changes hands.
Trying to make money in this involves a whole lot more. There is much to learn about the stock market and nobody can know everything. You research study and save. Build a portfolio and hope you did your homework on the stocks you bought.
2006-10-24 07:20:03 · answer #3 · answered by reallyno 3 · 0⤊ 0⤋
you know alot of your traders will say they are not gamblers, and I agree trading is not gambling figuratively speaking... your teacher gave you a horrible analogy for trading stocks, and obviously has not taken the time to learn about the stock market herself... basically when you buy shares in a company (stocks) you are controlling a percentage of the company. The reason your teachers analogy was so rediculous is due to the fact that technically you could say she was gambling on her way to work, playing the odds and statistics, and cheating death everyday, but we all know that driving is not gambling, it is just a risk we are willing to take to make our lives easier...
If you want to learn more about trading stocks visit this website
www.investopedia.com
That site has just about everything a begginner needs to learn the basics... Oh yea, your teacher is retard and should lose her liscense for giving her students stupid answers like "trading is legal gambling"
2006-10-24 04:53:20 · answer #4 · answered by Anonymous · 0⤊ 0⤋
It reflects the perceived value of the companies.
As a company is more or less valuable, its shares go up and down.
A shareholder owns a tiny percentage of the company.
Trading in shares without much regard to the underlying company is similar to gambling.
Investing in companies that you think will do well in the future is what the market is meant to be.
2006-10-24 03:47:01 · answer #5 · answered by Dentata 5 · 0⤊ 0⤋
Read my daily market comments and after some time, you will understand what moves the stock markets and why the stock market moves.
http://sharemarketcomments.blogspot.com/
2006-10-24 03:59:01 · answer #6 · answered by Anonymous · 0⤊ 0⤋
In the, 'For Dummies' series get, "Investing for Dummies". It will lay the groundwork of basic knowledge and then move on to "Real Money" by Jim Cramer and other books that he has written pertaining to the investment markets. Also watch his program called "Mad Money" on CNBC.
2016-03-28 06:04:28 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Consider researching your own companies... right here on Yahoo! Finance. I have found some solid performers this way. Go to: http://screen.finance.yahoo.com/stocks.html
2006-10-26 14:32:12 · answer #8 · answered by Mike S 7 · 0⤊ 0⤋
Go through this 4 page article and you shall come to know much about it.
http://www.abcport.com/finance/stocks/stk1.asp
Regards
2006-10-24 04:14:23 · answer #9 · answered by Azher 1 · 0⤊ 0⤋