Can The Stock Market Teach You About Business?
The stock market may be a mystery to many people, but the Internet is making it more accessible to ordinary folks. If you run a Google search for the stock market, you will find more than 69 million results, reflecting the increased interest in the topic. Many of these sites are related to the stock exchanges and financial websites, which offer general and specific investment advice. Where should you start if you are interested in the prospect of buying and selling stocks and shares for a profit?Firstly, you need to understand what you are getting into.
The stock market is a general name for all the various places that you can trade shares, and these are more correctly known as stock exchanges. Some of these have almost earned the status of household names, such as the NASDAQ, which deals mainly with the higher tech companies. The common or garden stock or share is actually a (very small) ownership in the company that it represents, and brings with it voting rights in the operations of the company, usually at an Annual General Meeting. Unless you hold a great many of the shares, such as some financial funds do for their investors, your voice will not make much difference, however.One of the most interesting things about buying and selling shares in a company, however, is that you become involved and engrossed in the whole business of the industry chosen, and follow the news with passion.
The share values, you see, reflect how the share buying public views the financial fortunes of the company, and the prices fluctuate frequently in anticipation of as well as in response to any relevant news. Nonetheless, quite often they will react in the opposite direction to that which you expect from a cursory view, which makes trading shares more of a challenge than it may at first appear. For instance, IBM may issue an earnings report that says their profits have risen since last year, and their share price may fall, not increase, as you might expect. It may not be that the company is really worth less, but the share buying cognoscenti may have already allowed in the price for an increased profit, and the announced values were less than expected, disappointing the market. You may even find that the share prices come back up in a couple of weeks.
The stock market is active every working day, trading millions of dollars. The economy of the country has a direct impact on the way the market performs. For instance, when there is poor economic news, the market usually reacts by going down. However, the opposite is also true and the market can influence consumer confidence, in that a good day on the stock exchange will make the economy seem better to the general public.With the help of the Internet, you are able to track the movement in price of any stocks that you are interested in. You can go much further than that, however. From your home, you are able to be a part of this burgeoning industry, and become an independent investor and trader. There are many companies, called brokers, that have a website and are able to take your orders to buy and sell shares directly from your computer.
The traditional stockbrokers, sometimes called “full-service brokers”, have websites, and they still provide a full service, which can include stock recommendations and assistance to those who feel that they need the support that has been expected in the past. However, their services come at a price, and there are also online discount brokers who compete on price, and provide just the basic no-frills service of stock trading.
If you are prepared to take responsibility for your own choices, and do the necessary research, these are the brokers that you will want to use.In order to be effective in selecting the shares that you trade, you will need to study the financial markets and will probably to seek guidance by reading books about the stock market, and other training. If you are interested in what is called short-term trading, buying and selling frequently to maximize your profits, as opposed to investing, which is generally buying shares to hold for a year or more, your best path to learning is to seek a mentored course, and there are several available.
Some of the best include interaction with experienced traders, who will test your understanding and comment on your stock selections.