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How do stocks work

Discussion in 'All other topics' started by pimpmex, Sep 22, 2007.

  1. pimpmex

    pimpmex Guest

    I want to know everything about stocks, how to buy them, everything,how they work what there made of, everything
     
  2. stochs

    stochs Member

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    That's a big question.

    But once you understand the basics it's pretty easy.

    how to buy them?
    - You buy them through a brokerage account like eTrade or Scottrade. They'll charge about $7 for buying say 10 shares or 100 shares. Plus you'll notice they tend to trade in 10/100/1000/etx not 1 or 3 or 5.

    - How they work
    Basically a stock gives you the right to own a company ownership. Ofcourse there are usually too many shares to outright just own a large company for a small investor such as you and me.

    Let's say you bought netflix stock because you like the way it works, and you think their stock is going to go higher so you buy lets say 1000 shares for $10 each -- $10,000 + $7 for buying it.

    3 Months later the stock price for Netflix has increased by about 20%. So each stock is now worth about $12. And if you sell your shares then you'll get back $12,000. So you have a profit of about 2,000 not counting the 7 + 7 for buying and then selling the stock.

    What are they made of?
    hmm... In the literal sense I guess it depends. Most people choose the digital type so they can be stored in your brokerage account but I guess if you plan on giving it as a present or if you want it on paper then you can ask your brokerage to have them printed and sent to you. That way you can store them in a bank account or something.


     
  3. Phlax

    Phlax Guest

    Apologies for the ignorant post.
     
    Last edited by a moderator: Sep 23, 2007
  4. ireland

    ireland Active member

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    stochs
    read the rules


    [​IMG]
    CLICK ON THE FORUM RULES PICTURE TO READ THE AFTERDAWN RULES


    3. Providing affilate tagged links to products or services is not allowed.
     
  5. pimpmex

    pimpmex Guest

    but do i actually win money without selling my stocks
     
  6. dRD

    dRD I hate titles Staff Member

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    Companies who make money (==are profitable) can pay out dividents, although companies aren't required to do so (Microsoft has been famous for not paying dividents). Dividents are share of the company's profits (==the money left after all the salaries, taxes, expenses, etc are paid) and company board makes the decision, typically once a year, on the level of dividents they pay. This vary wildly, say between 1 percent and 50 percent of the year's profits.

    So, say company has 10,000,000 shares and you own 1,000 of them. Company made $1M in profit last year and board decides to pay out 25% of that year's profits to shareholders. That means $250,000 to be divided by 10 million shares. As you own 1,000 shares, your dividents for that year would be total of $25.

    Shares are best investment in long term, meaning that you buy shares of several companies and intend to keep those shares for several decades. Stock markets, in loooooong term, always beat savings accounts, bonds, etc in terms of rise in valuation. And with most stocks, you get increased valuation, but also something little each year in terms of dividents as well.
     
  7. stochs

    stochs Member

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    That's not spam. I spent like 20 minutes writing up that answer.

    As for the affiliate, what are you talk about? The etrade and scottrade are not affiliate links. If you're referring to my signature then that's my website not some affiliate website.

    I'll read the rules again to make sure I'm not purposely breaking any rules.
     
  8. ireland

    ireland Active member

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    stochs
    i am not saying you posted spam..it a good post..

    you can not link your web site in your sig.
    thats Advertising your site.
     
  9. Phlax

    Phlax Guest

    You have my sincerest apologies then. Seeing your user-name, the link in your sig and then such a well constructed answer I immediately thought that it was spam of sorts. Again, very sorry, I hope you forgive me.

     
  10. stochs

    stochs Member

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    Not a problem guys. Just be careful in the future -- granted I should have read the rules more clearly.

    I'm quite familiar with spam on my own website so it kind of strikes a cord.

    I've removed the link. I guess I'll have to draw up a really good image looking sig.
     

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