What is the Stock Market Really?
The stock market (or equity market) is the global marketplace where corporate shares are issued, bought, and sold through electronic exchanges or over-the-counter transactions. The stock market is vital to a free market economy and the world of commerce in that it supplies companies with needed capital for growth, and stock investors with a partial share in the ownership of a company with the potential for significant gains related to that company’s future performance.
Stocks are a key element of most every investment portfolio. The best stock investments yield the highest returns of any investment vehicle in existence. Stock market investment has historically yielded an average return of around 10-12% annually, with many years showing much greater returns.
As with all good things there exists a flip side—the potential for high return is paired with the risk of investment loss. To effectively minimize this risk, a solid understanding of stock market investing practices is essential.
What are Stocks?
Simply stated, a stock is a share in the ownership of a company. Stock (aka shares or equity) is a shareholder’s claim on the corporation’s assets and earnings. The more stock acquired, the higher the ownership stake in the company.
Every shareholder does not have the right to tell the company’s CEO how to run the business. Rather, each share of stock is allowed one vote to elect the board of directors who will oversee the running of the company.
Stock is traditionally represented with a stock certificate, a piece of paper denoting ownership, and once could only be traded in person. Today almost all stocks are kept electronically “in street name" by a representing brokerage firm allowing for quick and easy trading at the click of a mouse or over the phone.
Stock Investment Risks and Rewards
The reason most people get involved with stock investing is the potential for a great return on investment. There are two main avenues for taking advantage of stock investing gains.
Dividends are a distribution of a portion of a company’s earnings to share holders. Dividends are quoted as either a dollar value per share or a percentage of the current stock market price. Great stock market picks can often become great income generators through their high dividend yields. Not every company offers dividends to its stock holders.
Open Market Trading. If a company does not offer regular dividend yields to its share holders, the only other way to realize gains through the stock’s growth is by trading on the stock market for the best possible price available. The ins and outs of how and when to buy and sell is learned over time through research, expert advice, and experience. A1stockpicks.com offers hot stock picks daily for our members.
An important and appealing feature of stock is that the maximum loss the shareholder ever assumes is the value of the original stock investment. Shareholders can not lose more than their original purchase price. Stock holders are not personally responsible for assuming company losses or paying debt.
As with so many things in life, successful stock investment requires a good understanding of basic principles. Choosing a few stock investment options rather than ‘putting all the eggs in one basket’ is another fundamental of stock investing. Combine this with expert stock advice from experienced online stock investment professionals and the stage is set to start building real and lasting wealth.
Courtesy : Stock Picks, Stock Research and Daily Predictions