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What is the Stock Market?

Investing, Stock Market

What is the stock market? We hear the phrase ‘Stock Market’ thrown around nearly every day, but what is it? The name ‘Stock Market’ itself is a misnomer, as it implies that there is only one stock market. In short, it is a place one goes to purchases ‘Stocks’ or ‘Shares’. When you purchase a stock, you are purchasing a part of a company. If the company grows, then your stock gets more valuable. However, if they do poorly then your stock loses value.

For example, let’s say that I bought one share of Meow Inc. for $50 last year, and now Meow Inc. is selling more kitty litter then ever! This year your one share of Meow Inc. is worth $75. You can sell it, and earn money for doing almost nothing!

However, the flip side is also true, let’s say that instead of selling lots of kitty litter, nobody wants to buy from them. Now your share of Meow Inc. is worth $40. You just lost $10, you could wait and see if they do better next year, or just sell it now and cut your losses.

Remember to be careful when trading on the stock market. Always plan your trades ahead of time and research the company you want to invest in. Without careful planning (and even sometimes with a plan) you can lose money, so be sure you don’t invest more money then you are willing to loose.

Conclusion:

The stock market is where you buy and sell parts of companies.
When trading on the stock market, be prepared to lose money. (Or maybe gain some!!!)
Always plan your trades ahead of time, and do not invest more money then you are willing to loose.

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