Stock Market Basics
The stock market's ever increasing popularity has been growing over the past couple of decades. Driven by the
continuing fear of not being able to retire with enough money and the
fact that it's still one of the best ways to increase one's wealth if done right.
Even with it's popularity there are many people who don't understand the stock market. Most of what they learn
is from people who don't understand the market either. There is a lot of information available that is based on
get rich quick mentality that was so dominant in the late 90's tech bubble or you might know it as the dot.com
era. People thought buying stocks was the no-risk golden path to riches. The tech bubble crash shook up a
lot of people up back into reality. The stock market does create wealth for people, but there is risk involved.
The key to wealth in the stock market is understanding the advantages and disadvantages of your investment
strategy.
This is exactly why we created this stock investment guide. We want you to fully
understand what the stock market is, how to invest in the stock market and learn the fundamentals of every
investment strategy that interests you so you can make informed decisions. We'll start by explaining what is
a stock and the different types of stocks that are available to invest in, what makes a stock move and much more.
A simple explanation of stock is a share in the ownership of a company. Owning a share or shares of stock gives
you the claim to the company. As a shareholder you are entitled to your share of the earnings as well as voting
rights.
There are two different types of stocks. The first and the most typical is called common stock. Common stock is
what most people talk about when they purchase stock. This type of stock can gain the most over the long term as
compared to other investments. The other type is called preferred stock. Preferred stock usually receive a fixed dividend that are
guaranteed forever, while the common stock any dividend is variable and can be stopped at any time.
However, common stock is also at risk the most if the company goes bankrupt and has to liquidate it's assets.
Common shareholders will not receive any money until the all creditors, preferred shareholders and bondholders
are paid in full.
What makes the price of a stock move? It's simply the supply of people willing to sell at certain prices and the
demand of people willing to buy at certain prices. As the demand rises for a stock so does the price people are
willing to pay for a stock and the price people are willing to sell at. The big question is what determines
someone's willingness to buy and sell at certain prices or times.
Every successful investor uses some type of investment strategy. This determines what stocks to buy, what
price to buy it at, how long to hold a stock, when to sell it and at what price to sell it at.
All of these factors are determined by what investment strategy you are using. That is why selecting the
correct strategy is so important.
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