Are you perusing the World Wide Web for quite sometime now to get a hold of stock market for dummies information? Are you tired of committing investing mistakes because you have no clear trading plan? Before you experience huge financial loss, this article will equip you with the most useful information about the stock market.
The Stock Market
First and foremost, you must realize that the stock market is a complicated and intricate investing platform. The good news is that the internet makes it effortless than ever to learn about stock buying and trading investments.
The NASDAQ and the New York Stock Exchange (NYSE) are the most popular and important stock markets in the US. Stocks or shares represent a specific portion of ownership in a company. Enterprises sell them to generate money for expansion and other business projects.
The stock market for dummies will let you recognize the main forms of stocks: the common and the preferred stock.
When you acquire a common stock, for each share that you own, you are awarded with one proxy or vote to exercise in the designation of the company’s board of directors during the yearly board meeting. If the company does not succeed, you lose your investment since common shareholders are the last investors to get paid.
As a shareholder you are entitled to a specific percentage of the company’s profits based on the number of stocks that you own. The distribution of profits happens through dividends, or by simply increasing the value of your stock.
Preferred stock is more costly than common stock due to the security that it furnishes. If you are a shareholder of a preferred stock you are typically guaranteed with a dividend for the entire term of ownership. In case the company failed to perform well in the market, you will be recompensed first before common shareholders, but behind banks known as debt holders. You also have firmer voting rights than common shareholders.
The Market Types
- Bull Market – This takes place when the economy is doing well – there are numerous jobs and the investor confidence is very high.
- Bear Market – This happens when the economy is down – unemployment figures are high with a low investor confidence.
The Stock Prices
So what are the factors that make the stock prices rise and fall? The stock prices are profoundly impacted by the supply and demand chain. Due to this, there are some investors that establish the stock value by their predictions as well as their expectations. Other investors carry out extensive study and research to understand several company statistics. The most critical aspect influencing the value of stock is its profits per share.
The stock market for dummies guide will help you recognize the few choices on how you can purchase stocks.
You can work with a broker. Discount brokers deliver limited attention to your investments at minimum cost, while full-service brokers give out full attention to your investment portfolio at a premium price.
DIPs or Direct Investment Plans and DRIPs or Dividend Reinvestment Plans are offered by individual financial institutions, permitting the purchasing of stocks directly from them.