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US Stock Market: The Beginning
Understanding the US Stock Market can be daunting especially when you're just a beginner looking to understand what stocks are. You may have heard that some people hit it big because of investing in stocks. You may want to invest also but aren't sure how the system works. To help you understand the US Stock Market, I put together an introductory guide in learning and understanding the US Stock Market.
The US Stock Market, as the name would suggest, is a public market where the stocks are bought and sold. There are currently two formal stock markets in the United States today. The largest stock exchange in the United States and the most prestigious in the whole world is the NYSE or the New York Stock Exchange, home to most of the DJIA companies. The second largest stock exchange is the AMEX or the American Stock Exchange. NASDAQ or the National Association of Securities Dealers Automated Quotations can also be considered as a stock market because stocks are being traded but it has no physical location as stocks are being traded online.
Stocks Defined
What is a stock? A stock represents a share of ownership in a corporation. For a corporation to be publicly traded it must first be a public corporation registered in the Securities and Exchange Commission and has undergone an IPO or an initial public offering. The value of the corporation is then determined to arrive at how much the corporation is worth. If is has a value of $12 million it can have 12 million shares that are publicly traded at $1 each or maybe 1 million shares with $12 each. In any case the value of the corporation is the same. You may ask why private corporations want to become public corporations. This is because the original capitalists or investors of the corporation want to earn more. Going public is also a good way to gain more investments for a company's expansion or growth. So when you buy a share of a corporation's stock, you become one of its hundreds maybe even millions of owners.
Earning from Stocks
The next question is how you can earn in buying and selling stocks. This is the reason why you are interested in investing in the first place anyway, right? There are two ways of getting back your investment. One is through dividends and the other through capital gains. Dividends are a distribution of the company's earnings per share or (EPS). Since you are an ‘owner' you get a portion of the company's profits proportional to the stocks you own. Younger companies usually do not give out their EPS but instead invest this or use it to expand the corporation for more profit. More mature corporations give out their EPS quarterly.
The other and more popular way to earn from your stocks is through capital gains. This is when you sell your stocks at a higher price than what you bought it for. Considering that stock prices fluctuate every second, investors buy when the stock is low and sell when the stock is high. At least that's what some people do. Some investors buy the stocks and hold them in anticipation of an even a bigger stock price jump. There are still many things to learn about stock exchange but at least you get a preview of how stocks work.
The US Stock Market, as the name would suggest, is a public market where the stocks are bought and sold. There are currently two formal stock markets in the United States today. The largest stock exchange in the United States and the most prestigious in the whole world is the NYSE or the New York Stock Exchange, home to most of the DJIA companies. The second largest stock exchange is the AMEX or the American Stock Exchange. NASDAQ or the National Association of Securities Dealers Automated Quotations can also be considered as a stock market because stocks are being traded but it has no physical location as stocks are being traded online.
Stocks Defined
What is a stock? A stock represents a share of ownership in a corporation. For a corporation to be publicly traded it must first be a public corporation registered in the Securities and Exchange Commission and has undergone an IPO or an initial public offering. The value of the corporation is then determined to arrive at how much the corporation is worth. If is has a value of $12 million it can have 12 million shares that are publicly traded at $1 each or maybe 1 million shares with $12 each. In any case the value of the corporation is the same. You may ask why private corporations want to become public corporations. This is because the original capitalists or investors of the corporation want to earn more. Going public is also a good way to gain more investments for a company's expansion or growth. So when you buy a share of a corporation's stock, you become one of its hundreds maybe even millions of owners.
Earning from Stocks
The next question is how you can earn in buying and selling stocks. This is the reason why you are interested in investing in the first place anyway, right? There are two ways of getting back your investment. One is through dividends and the other through capital gains. Dividends are a distribution of the company's earnings per share or (EPS). Since you are an ‘owner' you get a portion of the company's profits proportional to the stocks you own. Younger companies usually do not give out their EPS but instead invest this or use it to expand the corporation for more profit. More mature corporations give out their EPS quarterly.
The other and more popular way to earn from your stocks is through capital gains. This is when you sell your stocks at a higher price than what you bought it for. Considering that stock prices fluctuate every second, investors buy when the stock is low and sell when the stock is high. At least that's what some people do. Some investors buy the stocks and hold them in anticipation of an even a bigger stock price jump. There are still many things to learn about stock exchange but at least you get a preview of how stocks work.
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