I feel really dumb. My entire life i’ve heard people talk about the stock market, but i never understood it, never knew what it was, how it worked, and it’s significance. It’s like i’ve been in a cave my whole life. So i saw the movie Trading Places the other day and i didn’t understand some parts, so i told myself "that’s the last straw" so here i am.
What is the Stock Market?
Where can I go to buy or sell Stock?
Home | Investing | Blog article: What is the stock market? What is it's significance for our economy?
a1apbc 5:04 pm on February 20, 2010
Keep it simple. Refer to what is known as the accounting equation.
ASSETS-LIABILITIES=OWNER’S EQUITY
Owner’s equity means stocks for our purposes. Liabilities are borrowed funds, like bonds and accounts payable. Assets are everything that the company owns, like cash, accounts receivable, inventory, and machinery. An alternative form of the equation above states:
ASSETS=LIABILITIES+OWNER’S EQUITY
Thats right, all assets must be funded with either debt, or actual ownership. If you are a stockholder you are an owner and if you are a bondholder you are a creditor, or lender.
The stock market gives investors the opportunity to buy into this equity, as stated above, on a secondary market. Stocks (aka shares, equity, stock, etc.) primarily give the investor the right to vote for changes in the Board of Directors and the right to receive dividends when and if they are declared at a favorable tax rate (currently-but this rate is likely to rise with the new Administration). With a little bit of luck, maybe the stock you buy might appreciate too, but it could also lose value.
You must buy or sell stock through a broker. Discount brokers like E*Trade, Ameritrade, and Schwab enable you to buy and sell stocks at a lower price than a full-service firm, in which you would deal with a financial advisor.
The trading that you see in Trading Places is commodities, not stocks-specifically Frozen Concentrate Orange Juice futures. Great movie!
rugbyfree 5:04 pm on February 20, 2010
basically, stocks are exactly what they say they are…stock in a company. when you purchase stock you actually own a piece of that bussiness. There are several different factors that affect the worth of a share.
You can go to several different places to purchase stock…ameritrade, etrade, scottrade, and several others take your pick.
Daniel v 8.33 5:04 pm on February 20, 2010
If really you have to ask then you need lot of education to pick up the pieces.
You go here http://en.wikipedia.org/wiki/Stock_market
Read things and search for anything that you don’t understand.
Stock market is basically a secondary market that gives liquidity to the people who own stock of shares in the company. They cannot sell it back to the company so they sell those shares to other willing persons in the stock market.
And you can also search wikipedia for primary market and secondary market.