Introduction to

Stocks

Stocks are a type of investment.

 

You are basically buying an ownership in a company which gives you a claim on the company's earnings.

 

Other types of investment are: Bonds, Mutual Funds, Saving Accounts...etc

Investments vary on  factors like accessibility and risk.

Stocks are riskier than most investment types

So...if they are risky, why do people buy stocks?

With great power comes great responsibility 

Shares:  the units of ownership of a company that are you're buying. 

 

Market Capitalization:

 

 

Penny Stocks: low price stock that are typically less than $5 per share. The companies also have low market cap.

 

Dividend: part of a companies earnings given to shareholders. (Most companies don't give dividend though).

 

EPS (Earnings Per Share): Earnings relative to the number of outstanding stock

 

Earnings Report: When a company reports its quarterly earnings. The quarters are referred to as Q1, Q2, Q3 and Q4.

Bear: An investor who believes a stock is headed downward

Bull: An investor who belives the market is headed upward

 

Terminology:

Stocks are bought and sold at Stock Exchanges.

New York Stock Exchange (NYSE) is by far the largest one in the world with a market cap of 19.2Trillion 

Here are the top 10 in the world based on market cap and trade volume

IPO (Initial Public Offering): The first time the stock of a company is offered to the public (in Stock Exchanges).

The number of shares you own compared to the total number of shares in the company will give you how much of the company you own

Market Cap/Price of a share = Outstanding Shares

How to make money:

The common way is to buy stock when the price are low and sell when the price is higher.

Diversify your portfolio. Don't put all your money in one company or in one type of business. You can have diverse portfolio of companies in the sectors of tech, healthcare, energy, and more. 

Why prices change:

Price of a stock changes depending on the financial performance of the company. 

Even if a company is doing well financially, its stock price can also change based on irrational  reasons of consumers. At the end of the day, the value of the stock is dependent on how investors like you are feeling about the company. 

PSA

Higher share value does NOT mean the company is more valuable. 

😂