What is the Stock Market?

By Reed Floren

Are you wondering what the stock market is and how you can profit from it? So are many others, here is a quick overview.

The stock market is where stocks are traded. In case you don’t know some companies allow you to buy part of the company and these pieces of the company are called shares of stock.

The stock market takes place on various stock exchanges the two larges exchanges are the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ).

Typically stocks used to be traded at one general location called Wall Street which is in New York City in the United States, but now anyone with a computer can easily buy stocks and now computers do a lot of the work involved in keeping track of who owns what stock and how much the own.

The stock market is nothing new though, in fact in 1602 Dutch East India Company listed the first share of stock on the Amsterdam Stock Exchange.

I hope you have learned something new about the stock market and hopefully you have decided to learn more about this very popular investment method that is attributed to creating a lot of today’s fortunes.

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What is a Stock?

By Martin Lukac

You are finally to the place where you have paid off most of your debt and are ready to start investing in the stock market. You may have many goals that you are hoping to fulfill in the market – from retirement to an European vacations. That’s the first step already down: you know why you want to invest. Now you just need to know a few basics that tell you how.

The first thing you must do is learn how to understand stocks. A share of stock is the smallest unit of ownership in a business or company. If you own a share of a company’s stock, you are basically a partial owner of the company.

With your ownership comes the right to vote on members of the board of directors and other important matters that the company must decide upon. If the company distributes profits to its shareholders, you will probably receive a portion of this profit based on how much stock you own.

Many financial advisors suggest stock ownership due to the limited liability. If a company loses a large lawsuit and is ordered to pay a huge judgment, you stock simply becomes worthless. You won’t have to sell your personal assets in order to keep the company up and running. If you are a stock owner, you don’t face a lot of the situations that a full fledge business owner could face. For example, creditors can’t come after your personal assets, but they can in private-held companies.

There are two basic types of stock: common and preferred.

Common stock represents the majority of stock held by the public. The stock has voting rights of the owner, as well as the right to receive dividends. If a stock is being referred to as either “up” or “down”,” you know that the stock in question is a common stock.

Preferred stock has fewer rights, except for dividends. Companies with preferred stock usually pay consistent dividends. Preferred stock has first dibs at the dividends and profits.

Investors often purchase preferred stock for the current income from dividends. They are looking for companies that make big profits and use preferred stock to pay out dividends.

Common stocks are highly liquid, in most cases. Small companies may not be traded frequently, but if you purchase a large company stock, there are daily opportunities to buy and sell shares.

Beginning investors should take the time to read all they can about how stocks, trading and investments work before they jump right in. Know what stock sectors there are, know the market index, how dividends work and the different types of stock. All of these will assist you in becoming a better investor.

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