What are Stocks?
Stock is an equity investment that represents part ownership in a corporation and entitles you to part of that corporation’s earnings and assets. 1
How Does Investing in the Stock Market Make you Money?
It takes tenacity, perseverance, and patience to work the market long enough to exact genuine profits from investments.
How do you Trade Stocks and Build a Stock Portfolio? 2
If you’d like to buy a share of stock to build a stock portfolio in any publicly traded company you’ll most likely need the services of a brokerage firm. The securities industry is highly regulated, so you can’t just hang a shingle and start selling stocks to the general public, unless you’re properly registered and licensed. Most trading of stocks happens on a stock exchange. These are special markets where buyers and sellers are brought together to buy and sell stocks. The best known stock exchanges are the New York Stock Exchange and the American Stock Exchange.
Can you do This Online?
In fact, in many markets around the world, all stock trading is handled electronically. How Much Money Could you Make or Lose?
Despite the popularity of the notion that there is some secret to earning big returns on the stock market, there really isn’t one. Often it is simply the luck of the draw as to whether an investor will make money or lose it. The market is often a very volatile and fast-changing environment where fortunes are lost and found within the span of days or weeks. 3
What’s the Risk?
In investing, risk is the chance you take that the returns on a particular investment may vary. Investing in stocks, bonds, or mutual funds carries risks of varying degrees. While risk in your portfolio may be unavoidable, it is manageable. The riddle of controlling risk and return is that you need to maximize the returns and minimize the risk.
Is it Worth the Risk? 4
So, what constitutes acceptable risk?
If you don’t invest for retirement, or for the college education of your children, or to help meet your personal financial goals, then you’re most likely guaranteed a future of just scraping by. 5
And What’s a Penny Stock, Anyway?
The official SEC definition of a penny stock is a low-priced, speculative security of a very small company, regardless of market capitalization or whether it trades on a securitized exchange (like NYSE or NASDAQ) or an “over the counter” listing service, such as the OTCBB or Pink Sheets . 6
Footnotes:
1,3,4,5,6 are based upon my research on Yahoo Finance
2 is according to Sean Rasmussen