Figuring Out The Stock Market For Dummies

Perhaps you've heard a little about this thing called the stock market.  It seems as though it's frequently in the news and there are a lot of people who have claimed to have made a lot of money in the stock market as well.  Oh, and wasn't there something in the history books about the stock market causing the Great Depression?  

It's hard to watch a few minutes of the evening news without hearing something about the stock market, whether positive or negative.  The talking heads on TV are constantly discussing how the market did this or did that today.  It seems like a never-ending drama.  Regardless, you might be interested in learning a thing or two about this market you keep hearing so much about.  Perhaps you're drawn to the stock market with the thoughts of making some money.  Whatever it is that's caught your attention, a good introduction to this dynamic market and how it functions is a good starting place.

The stock market, in its simplest form, is a vast market that anyone can invest in. People use the stock market to buy and sell shares of thousands of different companies. A share is simply a very small fraction of ownership of a company. Have you ever wished you could own a company or at least part of one? With the stock market you can and often for much less money than you thought possible. You can buy just one single share of Google, for example, and you would be part owner of that company.

Holding stock in a company can be an interesting experience. You can look forward to receiving company performance reports in the mail and you can even cast a vote on important company issues. And since you are technically part owner of the company, the CEO and board of directors has to report to you on the status and health of the company. After all, corporations exist to make money for their owners and since you hold a share(s) of company stock, you are one of the owners. In addition to all this good fun, as a stock owner you can also receive a dividend when dividends are issued. A dividend is a profit that is distributed to the company's owners (the stockholders).

Most people buy stock, however, for the purpose of selling it down the road at a higher price and making a profit.  This is done buy trying to find a good stock that is selling at a low point and buying it with the intent of holding it until it rises in value.  How long an investor holds the stock depends on many different factors.  A stock could be held for years, months, days or even just a few hours.  There are some people, called day traders, who buy and sell stocks on a daily basis.

There really is no such thing as the stock market for dummies.  After all, you're no dummy.  Once you've got the big picture, understanding the jargon and strategies that people use to make money in this vast market is much easier to understand.