Basics of Stock Trading

Stock means ownership. As an owner, you have a claim on the assets and
earnings of a company as well as voting rights with your shares.
 Stock is equity, bonds are debt. Bondholders are guaranteed a return on
their investment and have a higher claim than shareholders. This is
generally why stocks are considered riskier investments and require a
higher rate of return.
 You can lose all of your investment with stocks. The flip-side of this is you
can make a lot of money if you invest in the right company.
 The two main types of stock are common and preferred. It is also possible
for a company to create different classes of stock.
 Stock markets are places where buyers and sellers of stock meet to trade.
The NYSE and the Nasdaq are the most important exchanges in the
United States.
 Stock prices change according to supply and demand. There are many
factors influencing prices, the most important of which is earnings.
 There is no consensus as to why stock prices move the way they do.
 To buy stocks you can either use a brokerage or a dividend reinvestment
plan (DRIP).
 Stock tables/quotes actually aren’t that hard to read once you know what
everything stands for!
 Bulls make money, bears make money, but pigs get slaughtered!