Stock Market For Dummies

The Stock Market for Dummies The stock market is a place where stocks, bonds, or other securities are bought and sold. When you buy stocks or shares in a company you gain part ownership in thatcompany. In today’s world people buy stocks in order to gain dividends on money that they have invested. Some advantages of buying stocks over bank deposits; moneymarket funds or bonds are that stocks havea long historical track. Although the disadvantages of buying stocks are that the market fluctuates very often and the stocks are never guaranteed so you may loose all of the money you have invested.Before deciding on what type of stock you are going to purchase, you must determine what type of investor you are. There are two types of investors: technicians and fundamentalists. Technicians areinvestors that tend to buy and sell stocks very quickly. These investors are not interested in book values, dividends or earning although they study the price patterns of that certain stock.Fundamentalists are investors that look for long-term growth in a company. They consider such factors as earning, dividends and book values and are as interested in the price patterns because they are in forlong term growth so they know that the market will fluctuate. When you are buying stocks there are three different types that you may choose from: penny stocks, growth stocks and blue chip stocks. Pennystocks are stocks from a company that has almost no chance of developing into a big company and the stocks are of very little monetary value. These stocks for example would be a chain of local pizzastores that would never make it into the big market of restaurants, such as Pizza Hut, but would do well in it’s local market. Growth stocks are companies that have a high potential to achieve greatsuccess, but they can also be very risky investments because they not are well established. An example of this type of company would one that invents a product that may make a big impact on the...