Learning about the stock market, or the stock market for beginners should be straightforward and easy.
Have you noticed that everything that you pick up on the basics of stock market investing is confusing? Pick up the latest financial magazine or newspaper, and you’ll find some expert says buy while another expert says don’t buy. There is a very good reason for that.
At any given time lots of people believe the market will go up – it is a great time to invest.
Lots of people also believe the market will go down – it is a terrible time to invest.
Getting conflicting information is all part of participating in a true market.
If you think about, nothing would ever happen unless someone wanted to sell and someone wanted to buy at the same time.
Any discussion of stock trading strategies will result in different opinions by different people.
In other words a market is comprised of buyers and sellers.
Beginning investing for most folks may seem like walking into the middle of a course on Egyptian hieroglyphics. You don’t need a stock market for dummies course. In my opinion the large mutual fund and life insurance companies intentionally like to keep these subjects confusing. If you can’t seem to figure out beginning investing, chances are good one of their investment advisers will try to “help” you.
Once you’ve been “helped”, you may find that you have bought a terrible product giving your salesman a nice commission.
Over the course of many years I’ve met a lot of very successful people. Most of these people have been in the top five to ten percent of income earners in the United States.
Not one in ten of these people knew very much of anything about the stock market. The ones who did know something did not know how to successfully invest and make money. Like so much of conventional wisdom regarding stocks and investing most of their knowledge focused on things that simply did not matter.
What’s worse is a whole host of radio and television personalities just give out horrible investing advice. These people comprise conventional wisdom.
In the markets conventional wisdom loses money.
If these so called “financial gurus” get it wrong, how much study and effort will it take for a regular person to get it right?
There is hope. It is a lot easier than you may think.
The point of this discussion is to let you know that you do not need a PhD in finance to be successful.
Making money in the stock market is nothing more than buying at a low price and selling at a higher price.
That’s all there is to it.
Buy low and sell high
So just what is a stock? For our purposes here it is only necessary to know that a stock or share is something of value. Like anything of value it can be traded.
The following video shows how buying and selling takes place in the trading pit. This video is from the Minneapolis Wheat Exchange and is a great example of pure buying and selling.
The screaming is nothing more than buying and selling. All they are attempting to do is what we’ve discussed before – buy low and sell high.
Even though this is the wheat market, the stock market is really no different. Those people that want to buy believe the price is going up. Those people that believe price is going down are trying to sell.
Nothing happens until a buyer and a seller get together on price.
The next thing to consider is where does this trading take place?
Most people will automatically know that the NYSE or New York Stock Exchange is where stocks are traded. It happens to be located on – you guessed it – Wall Street.
There are other exchanges as well. Currently, there are two primary stock exchanges in the United States, the NYSE or New York Stock Exchange and the NASDAQ.
The NASDAQ stands for National Association of Securities Dealers Automated Quotations in case you were wondering. Of course, there are stock exchanges all around the globe. There are major exchanges are located around the world in Asia, Europe, and Latin America.The stock exchange is where stocks are bought and sold. You can think of them like you would a chain of fast food restaurants. They all have food, but they are also different. McDonald’s has its products, so does Burger King. It is the same with the exchanges. They have their own products or listing of stocks.
For example, Starbucks and Microsoft are listed on the NASDAQ.
Abercrombie & Fitch and Macy’s are listed on the NYSE.
These exchanges comprise the stock markets around the world.
Do you need to know a little more about the stock market to feel comfortable?