Basics of Stock Market Investment Articles | Stock Market

By: Darren Williger

Although a good number of folks nowadays have faith in mutual funds and trust their able experts with their investments, it’s still imperative to know the stock market fundamentals. While everyone may not be perfectly cut out to invest in individual stocks, a simple knowledge of the stock markets is necessary to grasp how the economy and the business sector operates.

A stock refers to a controlling share in a firm. Generally called a share, it’s a tiny percentage of the company’s whole ownership pool. Shareholders are the owners of stock, or people who hold a controlling interest in the company. These days, shares are normally monitored electronically, but in the earlier times, shareholders would in fact obtain a certificate asserting their ownership.

What is the reason for holding stocks? In the first instance, you get a share of the profits earned by the company. When a company realizes a profit, it will at times distribute these profits amongst the shareholder, depending on the quantity of stock they hold. This distribution of profits is known as a dividend. Company's can choose to disburse their profits or plow them back into the company, but being a shareholder, every time a disbursement is done you will get your fair share.

Moreover, your stock value will go up and drop depending on the perceived value of the company in stock markets. If you purchase a $10.00 share and it climbs to $11.00 per share, you have gained a dollar on every share held by you, and then you can sell. But, this prospect is coupled with risk also. In case the share price drops and you sell, you tend to suffer a loss. The more unstable the stock, the greater the chances for profit or risk.

A good number of shareholders employ stock tables to monitor their stocks. These seem perplexing and complicated to read, but in fact they are simple to comprehend with some practice.

The ticker symbol is given first. This refers to the condensed symbol employed by stock markets to distinguish your company. For instance, GM stands for General Motors, WMT stands for Walmart. Once you choose a company, you have to learn its abridged name to check its advancement.

Secondly, the name of the company might be listed. Quite a few tables leave out the name as a space saving measure, while others mention it to render stock monitoring easier.

Thirdly, the most recent trading day’s number of sales is given. This is given in the 100,000’s, and hence 258 indicates 258,000 shares were purchased and traded on the day the market was last opened.

Then comes the high price and the low price. The high price refers to the highest price per share that the stock went for on the preceding day of trading. The low price refers to the lowest share price of that day. As the share prices keeps shifting all though the day, this is a fine indicator to observe the extent to which the stock changes on a daily basis.

Listed next is the closing price. This refers to the final price that stock traded for when the markets closed. This also will stand as the starting price for the following trading day.

The table, following the closing price, lists the change, or what the change in stock was by comparing the last closing price of stock with the previous day’s closing price. This will be given as a positive figure (the stock rose) or a negative figure (the stock was traded for a lesser amount yesterday as against the previous day).

In a large number of places stock tables are located, but the majority of people study the Wall Street Journal or the daily paper. Besides there are a lot of websites that monitor stocks also.

Naturally, you will have to choose a stock. Select prudently or confer with a professional and happy trading!