The Abcs Of The Stock Market

Arecent study indicates that Americans are saving less these days than they were 10 years ago, except for entrepreneurs and corporate executive and in one particular segment – young middle-managers who are about six to 10 years into their careers and only beginning to make headway into the higher echelons of their particular industry.

Are you one of these people? If you are, then chances are that you are currently in the process of planning or expanding your base of investments. You have probably given real estate a good look and determined that, although attractive, it is more ideal for a full-time real estate investor because it demands a lot of effort and time. You also probably have a tidy little sum invested in various banking tools like savings and time deposits as well as common trust bonds and government securities. That’s all well and good and your money is safe right there. But now you want to shoot for the moon, mainly by investing in the kind of company and industry that you may be familiar with. You are eager to try the stock market.

Here are a few basics about the stock market business.

The stock market is mainly a place where you sell or trade a company’s stock. These stocks are small shares in the company which it sells to the public in order to raise capital to finance its other ventures. Of course, you already know that capital is the money that a company spends for producing, improving, expanding, distributing and promoting its products and services. If you buy a company’s stocks, you are one of its shareholders.

The use of the term stock market also applies in reference to all the stocks that are available for trading (as well as other securities) as in the statement “the stock market performed well today.”

You can also trade bonds on the stock market. Bonds are a business IOU that indicate that the bond issuer holds the bond holder a debt. Bonds are traded directly between two parties over the counter.

You may opt to trade commodities on the stock market. The term commodities refers to agricultural products (coffee, sugar, wheat, maize, barley, cocoa, milk products) and other raw materials (pork bellies, oil, metals). For example, if you feel that the price of coffee will increase next month, you buy the coffee commodity now and reap the benefits of the price increase next month when you sell.

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