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Stock Market Investing

A Quick Look at Stock Market Investing

When people first hear about the stock market it can be very intimidating. Stock market investing is not an easy way to make money, but if you learn how to do it, and you are good at it, you can make a very good living, if not become very wealthy.   You hear of investors who participate in stock market investing and who aim to build a strong portfolio. They also speak of portfolio diversification as a must when learning to invest in the stock market. In order to understand what these terms mean, it is first important to understand some of the basics when stock market investing.

If you want to get started in investing in the stock market, there are a few terms that you should be familiar with. You need to know first that a ticker symbol is a short group of letters that represents a particular stock, for example General Electric’s stock ticker is “GE” and Coca Cola’s stock ticker is “KO.” You also need to know that a “share” in stock market investing represents and investor’s ownership in a portion or “share” of the profits, losses, and assets of a corporation. Shareholders are investors that hold "shares” of stock in a company, and earnings per share is the amount of profit each share of a company is entitled to. A business will “go public” and then carve itself into pieces to sell to investors in exchange for cash. When a company “goes public” it means that that it is selling stock in itself for the first time also known as IPO (Initial Public Offering). When learning about stock market investing you should also know what “market capitalization” is.  This is the amount of money that someone would have to pay it they bought every share of stock in a company. This can be calculated by multiplying the number of shares by the price per share.

When stock market investing you should also know that there are three different stock exchanges in the United States. In order for a company to be able to be “listed” on a stock exchange, it must meet the requirements of the exchange in regards to profit, employees, size, and the like. The three exchanges in the U.S. include the New York Stock Exchange (NYSE), the National Association of Security Dealers Automated Quotes (NASDAQ), and the American Stock Exchange (AMEX). During certain times of the year the markets will tend to exhibit behaviors. There are typically strong stock performances in January which is commonly referred to as the “January Effect.” This effect supposedly occurs because a lot of investors choose to sell some of their stock right before the end of the year. They do this so that they can claim a capital loss for tax purposes. It is also said that in the early fall around October, markets tend to slump. No investor knows for sure why these stock market trends occur, however, they still pay attention to them since they have occurred throughout the history of stock market investing.

This article presents a very low-level introduction to the stock market basics. For those of you that are sincerely interested in pursuing stock market investing, the information that is out there is endless. Take your time doing your research, but do it vigorously. Remember it takes money to make money, and invest in stock market investing 101 classes and stock market for dummies books. Good luck!


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