•A stock is that a stock is a certificate that shows you own a small percentage of a corporation.
•When you buy a stock you pay for what the company owns such as offices, different materials
etc…
•Advantages of having a stock is that if the company that you invest in makes a profit the price of
your stock also goes up.
•Disadvantages, if the company goes in loses your stock price goes down as well.
•Stocks gives you a right to make decisions in the company that you bought stocks of, the more
percentage you have the more decision power you have.
The stock market is like any other market but in a much more organized way. The stock market
is for the trading of the company’s stock. The stock market is the place where there is the
transaction of shares, where the shares are bought and sold. There is a stock market almost in
every country, all of the listed companies are on the stock market, a company can be in 1 or
more stock markets. An example of a stock market is the New York Stock Exchange (NYSE).
The stock market is only buy and sell there is no if or but, in the stock market there is no such
thing as if I would have sold this yesterday I would have had more money but I couldn’t
because I was too busy, in the stock market these excuses don’t exist. In the stock market it is
more important when you sell than when you buy, it is more important when you sell because
suppose when your share is going down and you prefer to keep it because you think its going
up you can save money but if your share is going down and you keep your share because you
think it is going to go up but it goes down then you can loose a lot of money so you have to
know when to sell, but it can also be that your share is going up and you get too greedy and
you think it is going to go higher so you keep the share but is goes down and again you loose
money, like the case with Enron that everyone wanted to buy their shares because they went
very high and then they declared bankruptcy. In the stock market it is possible that no one
wants to buy the share you are selling and that no one is selling the share you want to buy
although this is very rare but you can buy the shares if you pay more than the market value.
•Common stock
A common stock is very easy to explain and to understand. A common sock is a stock that
gives the shareholder the voting right to make decisions in a company. As the name implies
the common stock is the most common type of stock.
•Preferred stock
Preferred stock has more priority than the common stock in the distributions of assets.
Although most preferred stock do not have the voting right, but some preferred stocks have
special voting power in some cases for example the issuance of new stocks or to elect
directors
.
•Dual class stock
To explain and understand this type of stock is more complicated. A dual class stock is
issued for a company with different classes which has different rights on voting. Each share
have a different power to vote for.
•Treasury Stock
Last but not least this stock is a share that is bought by the company back from the public,
also very confusing to understand.
Advantages
Advantages and disadvantages are very straight forward. The advantages are you don’t really have to
work, if you are lucky you can have double of what you had or even more, a wide range of stocks to
chose from. Over time people usually make more money in stock than in keeping it in the banks,
investing in bonds and other investments. You can buy and sell stocks from your house you do not need
a big office and you get a part of the company’s profit.
Disadvantages
There are a lot of disadvantages which are: one can lose a big part of their money invested, difficult to
know how your share is going to go, when investing, a lot of time is needed to analyze company and
reliability, no real time to know when to sell or buy stock, in other words you never know what’s going
to happen and there is a lot of luck involved and a lot of prediction needed.
First I am going to explain how to do it on the internet. First of all you need to have a back account
and you need to apply for the service which gives to access to check your bank accounts, how much
you play and then they give you another password which is called an electronic signature which you
can also change, this signature is to make sure you want to invest in stock or withdraw money. They
will give you a password and a username but you can change these things later on.
The website I went on to see how to invest was on http://www.gruposantander.es/ (this website is in
Spanish)when you go to this website you go to the particulares (in Spanish which means you are one
person not a company) and there you put in your username and password. Once you have typed
these you will enter another page which you have to go to the tab which says Mis Inversiones, you
bank account will appear and you go to the option Operativos de valores then it gives you the
option of buying and selling in local markets and in international market. After you chose then you
need to put in your electronic signature after you put in your electronic signature you chose which
stock you want to buy, then you can chose when to buy it in the sense I want to but the stock when it
reaches 10 euros and you can put a limit for example 3 days if you want the stock in three days but if
it doesn’t find the stock at that price in 3 days then the order will be cancelled. You can also buy it on
the spot. To buy shares on the internet you will have to know the ticker of the company.
You can buy and sell stocks with whichever bank you deal with, all you have to do is go on their
website and it will have very similar steps as the ones I explained to you. There is one problem
though you have to be over 18 to do this but you can always use one of your dads or any other
relative’s accounts that are older than you.
The previous explanation was also through a bank but on the internet, you can also buy stock
through a bank even if you don’t have internet, to do this you are going to need a bank account with
the bank you want to buy the stock through. To buy the stock through a bank you have to send
them a letter that includes: your bank account number, what share, how much you are willing to
pay for each share, how many shares you want and your signature to authorize the buying of
shares. Although sending the letter can be a little bit of a pain because at the time when the letter
reaches the bank the share you wanted to buy could have gone up or down, there are also faster
ways of doing this by sending the letter through email or by a fax. When you’ve got you letter ready
you might be thinking who do we send it to. Well, if you send it through a physical letter you send
it to any branch of the bank, and you direct it to the branch manager or to the person in charge of
the buying and selling of the shares, if you send it via email or fax, you direct it to the same person.
If you have a good relationship with the bank you can even call them giving your details such as
bank account number and identification number then you tell them from which company you want
the shares, the total amount of shares and how much you are willing to pay for each share. For this
you also have to be over 18 but the solution is very clear you can always use one of your dads or any
other relative’s accounts that are older than you.
A broker is a person whose job is to invest your money in stocks which he has been
studying and think that they are going to make you money. A broker charges you a
percentage on your profit, also they can charge you a percentage on what you invest it
depends on your contract. You can find brokers on the internet or in advertisements on
newspapers yellow pages etc… To invest through a broker is the same as investing
through a bank. Although when you invest through a broker he gives you advice on what
you should invest but it’s your final decision that counts. You send a letter or call your
broker give him your bank account and ask him his opinion and tell him to buy the stock
he advises or the one you want, you tell him the quantity and at how much you want to
buy it for. Brokers are usually for people who have very little time to do research or who
have little knowledge on the stock market. For this you also have to be above 18.
First of all you have to know when to sell your shares that is the most important part. Selling
your shares is very simple, if you want to sell them on the internet instead of putting the option
of buying you click on the option of sell and then a list of the shares you own come up and you
can chose the quantity and what price do you want to sell it at. If you want to sell shares through
a bank all you have to do is send the letter or if you have a good relationship with the bank you
can even call them you tell them which share to sell how many shares you want to sell and for
what price. When you have a broker he advises you when to sell your shares all you have to do is
give him the approval or tell him when to sell the shares. When I say you can buy or sell your
share for what price I mean that you tell them I want to buy the share when it reaches 1$ and it
was 1.50$ and you can chose the amount of time you want to do this for example I only want to
buy the share in the time space of 1 day. You can do the same for selling your shares.
Ask price-Price the seller is selling the stock
Bearish-Investor who invest cautiously and thinks stock market will go down.
Bid price-Price the buyer is willing to buy for.
Bonds-A bond is a fixed interest financial asset issued by governments,
companies, banks, public utilities and other large entities. Bonds pay the bearer a
fixed amount a specified end date.3
Broker-A broker is a person who deals between the buyer and seller.
Bullish-Investor who thinks stock market will go up and invests largely
Dividend-The payment made by a company to the shareholder.
Downturns-Negative movement in the stock market.
Investing-To place money or capital to get more money. You can invest in the
stock market.
Securities-An investment instrument, other than an insurance policy or fixed
annuity, issued by a corporation, government, or other organization which offers
evidence of debt or equity.4
Share-A part of a company. If you own a share you own part of a company.
Shareholder-A person or company that owns one or more shares in a company
that is listed on the stock market.
Stock-A stock is an inventory; it is the stock of something such as a stock of
clothes or a stock of cars.
Stock market-A place where stocks, bonds, or other securities are bought and
sold.
Ticker-Symbol which is listed on the stock exchange.
3 http://economics.about.com/cs/economicsglossary/g/bond.htm
4 http://www.investorwords.com/4446/security.html
Now that you know how to invest here are some tips on investing:
•Start small but think big
•Buy business that you think are going to be successful not stocks.
•Think for the future not present.
•Do what you think is best.
•Read a lot about the stocks.
•Invest in few stocks, better to have a lot of money in few stocks than have little
money in a lot of stocks. Concentrate on your investments.
•Keep the investing simple, if you do not understand the company plans don’t
invest in them.
•Learn from other people’s mistakes.
•Think wisely when selling your shares.
•Invest in businesses which are managed by honest people.
•Invest in one zone. Your specialty such as a type of industry.
•Take your time in making your decisions.
These tips are very simple and most of them are from a book called “How Buffet
does it.” The tips are not very hard to follow, and it will help you gain
experience and confidence when invest in great quantities in the future.
www.sharetradingeducation.com/
www.offthemark.com
http://en.wikipedia.org/wiki/Stock
http://www.sharetradingeducation.com/default.asp?d=100396&p=48114
http://www.nse.co.ke/download/investoreducation/WHAT%20IS%20A%20SHARE.pdf
http://money.guardian.co.uk/investments/shares/factsheet/0,,596027,00.html
http://money.howstuffworks.com/stock.htm
http://www.zeromillion.com/financial-services/stocks-trading-advantages-anddisadvantages-by-tim-wreford.html
http://ezinearticles.com/?Stocks-Trading---Advantages-and-Disadvantages&id=60168
http://www.finweb.com/investing/common-stock.html
http://newyork.craigslist.org/cls/245534052.html
http://www.factmonster.com/spot/stockmarket.html
http://www.ehow.com/how_544_buy-stocks.html
Stock Market Book, Dalal Street Journal’s
Stocks to Riches, Parag Parikh
Suresh Chainani (person who helped me)
Mohan Chainani (person who helped me)
Karishma Chainani (person who helped me)