Stock shares are pieces of paper which represent portions of ownership of a company to the owner of the shares of stock. Often when ownership of a company becomes public, the total ownership of the company is divided into relatively small shares which are distributed among the original owners. More shares are then sold on the public market to build funds for the company so that it can build, develop, and expand. Then, until the company undergoes liquidation, those shares are continuously bought and sold on the open market by people who wish to cash in or invest at any time based on the perceived value and future value of the company as a whole.
This is where I tell you what in my honest opinion separates the noble from the peasant class in today's society. The defining factor of a present day American Noble is ownership of property. Not the everyday run of the mill stuff you buy and watch deteriorate indefinitely in value from the day you bought it (ex: toys, cars, clothes, entertainment, etc) but company and land property.
If you are the owner of a home, you are the land-"lord" retaining almost the same Lord Of The Manor rights of old. In my honest opinion, home rental is the most clear case of indentured servitude in this country. The solution I would suggest would be to put caps and limits on what can be charged for rent or better yet create a mandatory rent to own program, but that's a different subject to save for a rant later. The great thing about stocks is that you don't need credit to own them or even an unreasonable amount of money to invest to start. Yet when you own a share of stock, you own a part of that company that it represents. You have a greater right to observe what that company is doing and they have a legal obligation to cooperate with your best interests.
Though it's not the perfect investment, consider if you invested in 9 shares of Verizon stock (VZ) for $25 each. A friend of yours simultaneously signs up for a 2 year contract with Verizon, buys a $100 phone that will only work with Verizon, and pays $125 per month. Your friend then mentions a real problem that he has with the company and decides to complain. To help out a little you decide to call the investor relations of Verizon to make the same complaint about how Verizon is doing business. Who's voice do you think will have a greater impact? The investor's. What's more, if you reallly believe that things can be done better than that at Verizon, you can go to meetings and presentations exlusively meant for investors and you can help vote for where the company should lead its practices.
Your money is also more valuable than your friend's money, because it's growing in value. As your friend will never see a dime of his back, you can cash yours out probably a month or so or later for about $35 per share and make an extra $80 after commission on top of your initial investment. When you own in this economy, you float by while everyone else is struggling to earn every penny. The more you own, the easier life gets 10 fold. Ok, so with that said, here's step 1 of getting to know how you can make money on the stock market. Go to updown.com, where you can play with fake money on the real stock market. I am in no way benefiting or affiliated with updown.com, so I can say that you should NOT believe any offer or ad on their site. Those ads are often bad sites that want to waste your time and take your money. This is a valuable tool for your education on stock trading, but they are not always very picky about the honesty of their affiliates.
Your first assignment will be to pick an industry or company that you believe in. Think of the stuff you like the most and find some leading companies that make those items. Each publicly traded stock has a ticker, which is a small acronym that represents them. VZ for example is Verizon's ticker. A great way that I found to locate the ticker of a company is by finding their page on Wikipedia, and looking for it on the upper right side of their page that lists their details.Once you've found a company, go to Google or Yahoo, put in a search of the ticker and click on the finance option for the type of search. Take a look at the graphs of the history of its value per share. While being weary of splits (times where shares are divided or combined into smaller or larger values) consider the idea of how you would ideally have liked to buy the stock while it's low and sell the stock while it's high. Consider when it's gone down, how fast it's dropped, and when it's risen, consider how quickly or slowly it's risen.
Now go to your new updown.com account and buy a few pretend shares of that company with your fake money, even if it looks like it's at it's peak. Just get an idea of what trading is like. Then I suggest that you should do this with at least 5 other companies that you also believe in and over a week try to buy more shares when they are low and sell when they are high on updown.com. Take a good note of the regulations and limitations that updown.com gives you because in reality there's nothing to stop you from making the mistakes that updown.com prevents. You should never invest everything that you own into one stock. Always Always diversify.
Now have fun with it for a week or so and come back for your next lesson.
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