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Friday, February 6, 2009

Stock Market For Beginners

By John Border

Everyone's dream is to have a life full of riches and what better way to have those riches by using the stock market. Stock market can get you rich faster than anything else.

Yes, in theory the above can be true but there are two ways to do that , the first one to start a company, make it profitable, sell a a majority share to somebody else then reap the fruits of your labor through that minority holding in that company. The other way is less labor and you can get started with as little as $1000.

No risk and no gain is the mantra. Stock market is not for the faint hearted. You should strive to make good money out of the stock markets by investing in a particular stock. Your shareholding will be less but then you do not worry about the stock holding but about when you will make good money by selling your stake.

Before you take your cheque book out and start looking at companies to buy for $1000 , you should know the stock market basics and then start investing to make more money. It is absolutely very important to understand all the stock market terms and technical lingo which gets thrown around quite a bit to make some serious money in the market.

A share represents part ownership of the company and that ownehsip is called share. In simple English language a share is a portion which you can claim as yours. That is why share are called as such. Each share represenst the percentage of ownership that you have in the company.

Let us say you create 100 shares of the company , that means the total share capital of the company is $1000. Now ideally to maintain a majority shareholding XYZ company can sell 49 shares and still be a mahority shareholder.

Selling the shares is equivalent to selling your part of the company to the other. The reason that the other person buys those shares for more value from you is that for that money he thinks he will be able to again sell it for a better profit.

Hope this will you understand the stock marekt better.

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