Stock Markets Exposed - How do people make a living in the stock market?

How do people make a living in the stock market?

I know people who don't work and only invest in the stock market. They make more than enough to pay their bills and stash a good amount away? How do you do that? How much do you need? How do people make money in the stock market in good and bad market (bull and bear)? I know stocks are cheap right now, but once stocks reach their highs again, how do people make money? Thanks in advance to all whom answer.

Public Comments

I suggest reading about Warren Buffet and George Soros. The people who make the big money usually run Hedge funds or large corps like Goldman Sachs and Lehman Bros. Oops, yah, I guess some of them are collecting unemployment insurance right now. Day traders and Forex geeks may claim to make money, but only about one in a million ever makes enough to pay the rent for more than a month or two.
Hey I just started with stock about a month ago...I dunno I have nt been making much. like you have to reasearch and know the companies very well that you are investing in... Tell me who u know thats rich so I can get some advise lol .. I invested in like 6 stocks ..and i Dont know im new to this
First of all you should never invest more than you're willing to lose. Wait until you have a good amount of disposable income before investing. If you have a lot of disposable income I suggest putting your money in higher risk investments as they will yield a higher return. If your funds are limited, consider low risk investments that will increase slowly over time. Second, never assume anything about a particular firm's stock. Some company's stock value fluctuates rapidly while others gradually rise and fall over a period of years. Check the company's history and compare it to similar firms and competitors. You make money by purchasing stock when it is relatively low in value and selling when the price increases. There are always certain types of investments that do well in recessions while others do better during inflation. Gold for example should be purchased when the value of a dollar is relatively high and sold when the value of a dollar is low. This is because the value of gold and paper money is inversely related as gold can be used as a substitute for currency. It usually takes years for gold to increase in value but once it does you will see a huge return on your investment.
In order to make a living you investing in the market, you have to start with a large amount of capital. How large will depend on what your needs are, and how much you need to live the style you want. Example: if you have 1,000,000 and make 10% a year, that's 100k, but then you must subtract taxes, so you'll have 60-70k to live on. However this doesn't give you any margin for error in case of a bad year. The solution is a mixture of growth stocks and dividend paying stocks. If you invest largely in dividend paying stocks you'll have a solid income, though sometimes dividends do get cut. Wells Fargo just cut theirs by 85%. Dividends are nice, because you get paid in up or down markets. Most [not all] people who make their living from the market are living off the dividends. Once a stock reaches a high (I'm not good enough to know when this occurs, but some might be able to.) you can sell that stock and then invest in another one with better prospects. In every market including this one, there are growth stocks and duds.
Gradually over years the only way to make money is to invest regularly. The key is to find undervalued stocks and sell them when they have reached full value, then find another undervalued stock and replay the game. This works and you should be able to grow at 10 - 20% per year. You must remember you are investing for the long term. You won't win all the time, I've lost lots of money during the last two years. My favorite vehicle is closed end funds and exchange traded funds. You can buy them at a discount and they pay great dividends, long term and short term gains! Then you just need to decide what area will grow fastest.
They are very smart people and they know what stocks are worth everyday. If your looking to be a master at the stock market all by yourself, I suggest you take a look at Harvard University. If your looking to make some money in the stock market by using a new Artificial Intelligence software (p.s. most stock brokers use them today while they are still legal) I suggest you take a look at the only one on the web today. Good Luck