Scribd
Upload
104 views3 pages

Introduction To The Stock Market Part One: Asset

The stock market is a place where investors can buy and sell shares of ownership in public companies. Owning a stock means owning a very small fraction of the company. Stocks increase or decrease in value as the company performs well or poorly. The stock market is important for both individuals seeking to grow their money through investments and for companies raising capital. While the stock market fluctuates daily, long-term investing over years generally yields returns of about 7% annually on average. The performance of the stock market also influences the broader economy and individuals' lives.

Uploaded by

kimmo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
104 views3 pages

Introduction To The Stock Market Part One: Asset

The stock market is a place where investors can buy and sell shares of ownership in public companies. Owning a stock means owning a very small fraction of the company. Stocks increase or decrease in value as the company performs well or poorly. The stock market is important for both individuals seeking to grow their money through investments and for companies raising capital. While the stock market fluctuates daily, long-term investing over years generally yields returns of about 7% annually on average. The performance of the stock market also influences the broader economy and individuals' lives.

Uploaded by

kimmo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

Week 3 - November 18

INTRODUCTION TO THE STOCK MARKET PART ONE

What is the Stock Market?

The ​stock market is a place for investors to buy and sell


shares of stock. In the past, the stock market was a
physical place you had to be in in order to trade, but
nowadays most of the trading is done online.

You might be wondering, what are stocks?

Simply put, owning a company’s stock means you own


part of their company​. It’s a financial ​asset ​(remember
lesson 1?) ​that allows you to own a very very small
fraction of a business. To put it into perspective, Amazon
has 500 million outstanding shares. By buying one share,
you are paying $3135 USD (as of November 18) to ​own
1/500,000,000 of the company. As the company performs
well, your stock ​increases in value​, and ​vice versa​. Just
visualize the amount of money Jeff Bezos has considering
he owns ten percent of these 500 million stocks! The Office (US)

Stocks are offered by public companies that seek to trade small ​pieces of ownership​ for capital (money).
This way, companies can ​invest ​the money into projects that will make their company even bigger.
Information on the public companies are easy to obtain, which gives investors the ​trust and confidence
they need to invest in a company. This ultimately means that the stock market is an attractive place for
businesses to grow because it is generally easier to obtain investors when they can ​clearly see​ what each
company is presenting. The fun but scary part of the stock market is that nobody knows for certain what
will happen. Nobody can for sure predict the future state of the stock market, but there are many trends
and strategies that will allow us to see which stocks have high potential. Over the course of finance club,
we will begin learning these strategies that will equip you to invest in the real stock market.

Here is a short video summarizing what the stock market is​! Please take a look at it.

Interesting Facts:

● The S&P 500 index is a good indicator of how well the economy is doing, because it tracks the
top 500 companies inside the US stock exchange (stock exchange is almost like another term for
stock market)
● The New York Stock Exchange on Wall Street is the world's largest stock exchange
● The Great Depression was a result of the stock market crashing in 1929
Week 3 - November 18

Why is the stock market important, and why should I care?

The stock market provides a chance for people to ​grow their


money​, as well as for businesses to obtain ​investments​. Over
time, the stock market has shown to increase in value at a ​rate
of 7% ​per year. This means that by learning how to play into
the stock market properly, you can find yourself earning a lot
of money through investing in stocks.

In a shorter period of time such as a single day, the valuation of a particular stock or company can
change a lot, which makes it possible for day traders to generate or lose huge amounts of money.
However, It is definitely ​not recommended​ for most people to become day traders because the majority
of day traders end up ​losing extremely large​ sums of money. Long term investing is generally the safest
option for the average investor.

Furthermore, your life will be affected by the stock


market ​regardless ​of whether you decide to invest
or not. The stock market is accurate for giving a
picture of the current state of the economy, and as
we all know, the economy can govern how many of
us ​live our lives​. If stocks are showing significant
drops, it can be reflected in real day to day life as
we start to see changes in how businesses ​operate
and sell us products. Not only this, if you are
working a job, this could be reflected in the stability
of your employment. The stock market holds a
great influence on the hiring and layoff decisions
made by managers.

Evidently the most alluring part about the stock market is the ​ability to make money for yourself off of it.
This comes from being able to understand trends and how the stock market tends to move. Whether
you are an investment banker or novice investor, the main idea of the stock market does not change
very much - it is all about making money off ​changes in stock price over time. For novice investors, this
comes down to a simple motto - ​buy low, sell high​. You can purchase individual stocks, or even groups of
stocks (we will introduce types of stocks later) and attempt to sell them when they increase in price to
gain a ​profit​. Not just this, but stocks often issue ​dividends​, which are regular payments of company
profit ​to investors. As such, it is often key to pay attention to the market, since you can make good
money off of it! Over the course of finance club, we will be learning fundamentals to invest in the stock
market during our simulation to prepare you for the real thing.
Week 3 - November 18

The stock market is arguably an extremely important concept that is not stressed often enough in our
lives. Although many people will not care about the stock market, the stock market definitely cares
about everyone - controlling many ​aspects of lives​ around the world.

Finance Club is a great place to start learning


about investing in the stock market. Most of our
focus on the stock market will be directed in
semester two, but there isn’t any harm to
beginning early. Some great resources that we
recommend are:

- Reading news articles (Wall Street Journal,


New York Times, CNBC, etc)
- Watching Graham Stephan on YouTube
- Reading “The Intelligent Investor”
- Our discord server!

Keep your eyes peeled for next week’s lesson on part two of Introduction to the Stock Market.

Image References:
The Office: ​https://early20smoney.com/2018/05/14/office-taught-personal-finance/
Blue stock image:
https://www.usatoday.com/story/money/columnist/2018/09/16/stock-market-2018-avoid-timing-retur
ns/1303307002/
Life Jacket Cartoon: By Frank Cotham
https://condenaststore.com/featured/sorry-but-there-arent-enough-life-jackets-to-go-frank-cotham.ht
ml?product=greeting-card
Should students buy stock:
http://cbubanner.com/2020/02/24/pros-and-cons-to-college-students-buying-stock/

You might also like