Stock Markets Exposed

Stock Market?

How does the stock market work? If people make so much money off of the stock market, then why don't more people invest in it?

Public Comments

1. cuz you can also lose money
2. the stock market is for 'insiders.' In spite of regulations and scandals like Enron, the common person is the last to know, all the time, if they know at all.
3. It's best to call a brokerage firm (AGEdwards, Schwab,) and talk to a professional. You should understand how it works before you put any money into it, and understand how it works.
4. Here's how it works: You have a company that you own, and decide to "take it public" to raise money. Basically, this means you are selling little pieces of your company to whoever is willing to buy. Say your company is worth a million dollars, you sell a million shares at a dollar each. Because you are now "publically held", everyone gets to see your books. If it looks like profit will be good this quarter, someone who has a share (they paid a dollar for) might offer to sell it for $1.10. If someone else agrees with them, they might buy it. And so on. As long as a company is being profitable, being well-managed, and treats its employees and customers well, the price will creep ever upward, because the public are optomistic about its future. If you are a young person, and you put even a modest amount of money into some quality stocks, eventually it will make you rich. Fear is the only reason people don't invest.
5. Playing the stock market is alot like gambling. It can be very high risk. Some people do make tons of money while others loose everything. If you truly are interested in trying the market...talk to an investment specialist. Your Bank should be able to recommend someone.
6. I love your question. The facts don't lie. Stocks outperform almost every other traditional investment out there. No arguing with this fact. You'd practically have to have been in a coma for the past 50+ years to not have an optomistic outlook on the benefits of investing in the stock market. Anybody that lacks confidence in the US economy and the US stock market clearly is basing their opinion on something other than factual information. I have no idea why folks don't. There is hardly any good reason why folks don't invest their money in a diversified portfolio of stocks (and/or stock mutual funds, ETFs, etc.).
7. This article should give you a better understanding of the market. Hope this helps!
8. Companies sell their stock on the market, that gets them money to use for investment. Some stocks pay dividends, which is like interest on a loan sort of but doesn't ever pay off the stock. The price of the stock varies constantly depending on a lot of factors, including how profitable the company is and what their business prospects are. If the company goes out of business, the stock becomes worthless. If they are bought out by another company, the price typically goes up. In general, over very long periods of time, WITHOUT adjustment for inflation, people do make some amount of money in the stock market, but not a lot. Adjusted for inflation, people make even less. In general the stock market is about as reliable a way to make money as buying lottery tickets. By the way, with the stock market indexes (Dow Jones, S&P500, etc.) at all-time highs, now is probably the worst possible time to think about investing in the stock market if you hope to make money. The 1980s was the time to get in.
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11. There are a million reasons for not investing in the stock market. Here are 3: 1: Limited resources: Some people don't have enough money to get by day to day. If you're Joe Blow making a $1000 a month and can hardly make rent, you're probably not going to want to starve for a week to invest in Google, YHOO, Philips, or any number of other publicly traded companies. 2: Better Oportunities: Some people don't buy stocks because they have found better oportunities elsewhere. For example, instead of investing in the stock market they may want to start up their own business, which may eventually be floated on an exchange. They may also feel that the stock market is too risky and prefer a guaranteed return on their investment such as those guaranteed by the FDIC (Federal Deposit Insurance Corporation) in the form of a savings account, CD, or a government backed bond. 3: Spending Elsewhere: What good is money if you can't use it to buy things things you really want? If you made a $1,000,000 a year and invested every cent your entire life, what money would you use to buy things you need like a car, home, or entertainment? I hope this clears up the questions you have. If you need anymore help just let me know and send a line over at my site. Scincerely Johnny Bravo The Investing Sensei http://investingsensei.blogspot.com