I dont know the stock market, is this how it works?

Question

Let's say i want to enter the stock market. The High risk side, where you buy stocks (as i heard its the high-risk of investing.)

Lets say i invest in Microsoft.

I buy 50 stocks at $29. Then the price drops to $28 and i buy another 50 stocks. So that means my stocks cost me 28.50 right?

then i buy more stocks in other companies and i buy stock when it is low.

is this a good way to do it? invest?

im 17 and i want to go into the stocks when im 18 not roth ira's or mutual funds.... the high risk(stocks)........

or how can i make money fast buying stocks. I would have to find a company like microsoft that booms like how they where in the 90's right?

Answer 1

You should go to the library or bookstore and get a book on the subject and read it. The stock market is a very complex market. There are many ways to make money, and many ways to lose it.

Answer 2

"High risk"? Microsoft? Last year the company took in some 44 billion, of which about 36 billion was profit and had a price that ranged from a little over 31 to a little over 22, and that is high risk?

You are sort of on the right track. Suppose you saw the price slide from around $31 at the end of January (when the Vista announcements came out and people discovered again that Microsoft is about as graceful with innovation as an elephant on skates), but then noticed it starting back up in very early April at $28. About a month later it would be once more selling at around $31. Not much excitement, but it is a big and solid company--and you got it at a fairly inexpensive price. If you bought a hundred in late January (about 3,100) and bought another in early April (2,800), after you got the idea that it wasn't falling anymore, then your total investment is 5,900 or 29.50 a share. Yes, you did average-down your cost basis. Yes, selling at 31 now (6,200) would give you a profit of 300, or a yield of about 5 percent on your money for less than half a year at work. This may be better than in the bank, but remember, you don't know where a stock is going on such short notice. This sort of speculating is taking a risk, but it is not "high risk", and certainly not as regular as money in the bank.

First, consider that you are, as you've noted, young. There's oodles of time. You don't need to look at stocks like you want to drive a car--flat out fast. Take it easy. Still, you obviously could see a good company to pick, may all your picks be so solid.

Answer 3

Lets say i invest in Microsoft.
I buy 50 stocks at $29. Then the price drops to $28 and i buy another 50 stocks. So that means my stocks cost me 28.50 right.

You are buying one stock, Microsoft. You are also buying 50 shares (not stocks) of Microsoft at $29 and 50 shares at $28 so your average cost basis of your 100 shares is $28.50.

Stocks are not necessary the "high-risk" side of investing. Stocks (companies) like Microsoft, IBM, ExxonMobil, Proctor & Gamble, etc are not going to go out of business anytime soon. There are mutual funds that invest only in very small high growth (hopefully) technology stocks that are higher in risk than the above mentioned "blue chips." Also "junk" bonds of these risky small companies and bonds of subprime mortgages are much higher in risk than these blue chips. So don't make a general statement that stocks are high risk.
As to making money fast buying stocks --- back in 1998, thousands of people quit their jobs to "make money fast" by day trading stocks. 99.99% of them are back in the 9-5 job work force. Investing is for the long term. To make money fast, you will have better odds in Las Vegas.

Answer 4

Ownership of public firms are damaged up into stocks. When you purchase inventory, you are buying aspect of a organization. So if that organization makes cash, it could pay a few of that money out within the style of dividends. The extra inventory you possess, the extra dividends you can get. The inventory marketplace is in which persons purchase and promote stocks of firms' shares to one another. The importance of the inventory is what different persons suppose it is valued at and what they are inclined to pay for it. So if a organization makes more cash than they anticipated, there is a bigger hazard that they will pay bigger dividends at some point, so persons are inclined to pay extra for the inventory, and the cost is going up. Another form of defense is bonds. A bond is whilst a organization (or the federal government) borrows cash from persons. You lend a few of your cash to the organization, and the organization will pay you curiosity for allowing them to borrow it. At the top, you get again your preliminary cash that you just loaned them (the bond matures). You should purchase and promote bonds to different persons, too. Today, plenty of buying and selling is finished electronically (with bills each time you are making a exchange), and there are finances which can be almost a entire bunch of shares and/or bonds lumped in combination that you'll purchase as a kit. This is helping in diversification, because of this you unfold your cash round so if one organization is going bankrupt (enron), you do not lose the whole thing. I endorse doing study on Roth IRA's and trying out a website like forefront for making an investment. You fairly will have to do study to your possess, until you are inclined to pay any person else like a fiscal consultant to speculate your cash for you. I in my view think everybody will have to have a Roth IRA and give a contribution the highest they may be able to, each 12 months, and will have to make investments aggressively (shares) of their Roth if they are beneath age 30. But that is simply my opinion...

Answer 5

"jim Cramer" has a show "mad money" and written 3 books on investing..

you have the idea right to some extent..
there are some other books on the subject..
the other is "broker fee"
you need to find a good broker with a low fee...
so say your working with $5000 and buy 1000 shares of a $5 stock..the "broker fee" is important..on 1000 shares you have the broker buying fee and selling fee...lots of brokerages have a $5 or $7 fee which is 5-7 cents on a 1000 trade..
anyhow..you can sign up for "jim Cramer" and other trade information (Jim Cramer is partial owner of this and it's online).. www.thestreet.com
and at present if you sign up they have a game going on with no charge to "beat the street" in the game you can do your investing with pretend money and see how you would do
and then you get all the "traders" tips
it is homework/homework/homework..
"jim Cramer" even says that..to be a success you need to do "homework"..these stocks are ..well eg
look at "rimm" it went up $30 last week to $210.00
good luck

Answer 6

You need to buy stocks that have good value. Check out the company to be sure it will be in business tomorrow. Buy stocks a few at a time over time. If you try to time the market you'll lose money. If you hold long term you will make money.

Answer 7

The best book I've read on buying individual stocks is Morningstar's, "The Five Rules of Successful Stock Investing", by Pat Dorsey

http://www.amazon.com/Five-Rules-Successful-Stock-Investing/dp/0471686174/ref=pd_bbs_sr_1/102-3087144-9483342?ie=UTF8&s=books&qid=1183336252&sr=8-1

Answer 8

If your interested in learning about stocks. Why don't you search online, read some books and talk to people who are working as stock broker

Answer 9

You can get a lot of basic info on this site.

http://stock-market.superiorinvestor.net/stock-market-for-dummies.html

Answer 10

I suggest you to focus on your college education for now and buy a house and a car.