About Me
- Albert Wong L.K.
- Subang Jaya, Selangor, Malaysia
- Founder Of Blue Ocean Innovative Team (since 2006), H/P:012-3278718 awlk@streamyx.com, skype: albertwonglk, MSN: usj2197@hotmail.com MBA in Total Quality Management (Newport University, USA), Certified Financial Planner ( CFP), Certified Manufacturing Management Consultant (Sanno Management Institute, Japan), Certified Manager, Friction Materials Specialist, Agency Manager (Public Mutual Berhad) 黄縯富硕士 阿博尔特.黄，蓝海革命团队创始人(自2006年) 电话：012 3278718 电邮：awlk@streamyx.com, Skype: albertwonglk, MSN: usj2197@hotmail.com 全方位品管硕士(MBA in TQM)美国新港大学） 注册合格财务规划师 （CFP） 注册合格生产;制造管理顾问(Sanno 管理研究所，日本)， 摩擦器材料专家, 大丛信托基金公司-团组经理
Sunday, April 1, 2012
How the Stock Market Works
"Ladies and gentlemen, place your bets!
For a new investor, the stock market can feel a lot like legalized gambling!!! Randomly choose a stock based on gut instinct and water cooler chatter!
If the price of your stock goes up -- and who knows why? -- you win! If it drops, you lose!" Isn't that why so many people got rich during the dot-com boom -- and why so many people lost their shirts (not to mention their retirement savings) in the recent recession?
For a new investor, the stock market can feel a lot like legalized gambling!!! Randomly choose a stock based on gut instinct and water cooler chatter!
If the price of your stock goes up -- and who knows why? -- you win! If it drops, you lose!" Isn't that why so many people got rich during the dot-com boom -- and why so many people lost their shirts (not to mention their retirement savings) in the recent recession?
Not exactly. But unfortunately, that's how many new investors think of the stock market -- as a short-term investment vehicle that either brings huge monetary gains or devastating losses.
With that attitude, the stock market is as reliable a form of investment as a game of roulette. But the more you learn about stocks, and the more you understand the true nature of stock market investment, the better and smarter you'll manage your money.
The stock market can be intimidating, but a little information can help ease your fears. Let's start with some basic definitions. A share of stock is literally a share in the ownership of a company. When you buy a share of stock, you're entitled to a small fraction of the assets and earnings of that company. Assets include everything the company owns (buildings, equipment, trademarks), and earnings are all of the money the company brings in from selling its products and services.
Video Link on How the Stock Market Works
Why would a company want to share its assets and earnings with the general public? Because it needs the money, of course. Companies only have two ways to raise money to cover start-up costs or expand the business: It can either borrow money (a process known as debt financing) or sell stock (also known as equity financing).
The disadvantage of borrowing money is that the company has to pay back the loan with interest. By selling stock, however, the company gets money with fewer strings attached.
There is no interest to pay and no requirement to even pay the money back at all. Even better, equity financing distributes the risk of doing business among a large pool of investors (stockholders). If the company fails, the founders don't lose all of their money; they lose several thousand smaller chunks of other people's money.
Happy Investing....to be continue...in next posting...remember to come back often ..
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