What is the stock market and how do people become rich off of it?
02
May
Posted by: admin in: Investing
XIII asked: I’ve heard a lot about the stock market recently but I don’t know much about it. What is it? Also, I’ve heard that people have gotten rich off of it, how did they get rich?
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5 Responses
so got board
03|May|2009 1imprinted pens
this is a very complicated question so I am going to over simplify it. The Stock market is a “place” (I say place even though it is not really a place) where people can buy or sell stock. Stock is ownership of a company. to get rich of the stock market there are two ways to invest in the stock market that i will call traditional and gambling. in traditional you assume that the market will go up and down but in the long run it will go up and it will go up quite a bit and if you invest in such a way that allows you to invest in the whole market you will make some pretty good returns. in gambling (which may be a bad name for it) you pick a few stocks that you think will go up big over a short amount of time then what you can do is buy what are called “call option” which will allow you to use a little bit of money to make a lot of money but only if the stock you pick goes up a certain amount in a given amount of time. however if the call doesn’t go up you loose your investment…a lot like gambling. But people have made fortunes taking just those risks. hope i didn’t confuse you.
tradinginsider
04|May|2009 2trade silver
I can give you information that will help you skip over the 12 years learning curve where you would be losing your money over and over again. The stock market is set up on a 90/10 scale. 10% of the people out there make the money and everyone else (90%) donates to them so they can build their houses and buy their cars and property.
I started out in the stock market in the mid 90s and made a lot of mistakes and then I suddenly found out what works and what doesn’t. I have learned how to make money in the stock market. He res a synopsis of what doesn’t work:
1. Dint try to play the news. The pros on the floor get the news before you do at your laptop online. They have services such as First Call, and other immediate news services. Also the guys on the floor hear the rumors before you do. Basically what this does is the stock already moved before you even got the news, too late.
2. Penny Stocks. You might have heard about someone who made a mint in penny stocks. He bought 10,000 shares at .03 apiece and suddenly the stock jumped to 3 dollars a share and he bought a new car or a house. This is ultra rare. Usually you will buy a penny stock for .07 a share and then it will go down to .03 a share and stay there for a year.
3. You try to do momentum plays. If the stock suddenly shows up on the ‘most up’ lists for the day you think that you can join up with the momentum and make money too. But by the point YOU see it on the lists, the pros are already starting to sell it. You buy it and the stock starts to drop.
4. Rolling penny stocks? No. Everybody wants to buy at the bottom of the roll, no body wants to sell at the top of the roll.
5. You try to daytrade, fighting the market makers and screw them out of thier bid and ask spread. Not going to happen. You are up against a professional who makes his living doing this.
6. You learn technical analysis. But this takes about 6 years to master.
7.You try giving your money to a pro…most money managers dont make money during down years. As a matter of fact they can lose quite easily.
8. You can follow stock pics from the Wall Street Journal or IBD but then everyone sees those pics. You would be one of the 90%. Those pics, unless they are forcasts, show stocks that are currently hot. As you see them pros are dumping them.
9. You try to catch a ‘falling knife’. A stock drops big because of news so you buy it because you think its cheap. Yeah but there was a reason the stock went down, a fault in the stock itself. So it keeps bleeding after you buy it and then it keeps dropping. Then it gets downgraded and drops more.
10. You tried options. Most people dont know how to do them right and most people lose at options. Heres why. a) you buy an option that expires at a certain time (they all do) and the stock goes down, your option goes down. b) you buy an option and the stock remains at the same price and is flat. The option time erodes and you are left with nothing. c) You buy the option and the stock price soars. You are estatic because the stock price made your option triple. Sell the option? Hell no, it could go up more! So you hold it. The problem with that is they all expire worthless if given enough time. So you hold hoping for even more money then the price goes down. You lose.
12) You move your money around in one big pile. Investing 100% of your money all at one time is a big mistake because that one time when you have a catasrophic loss from one trading mistake is the time you are done. Always have different piles for trading down or up.
Well that is my two bits and I suggest that you follow this if you want to learn and make money. Site I have this from is below.
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08|May|2009 3trade show items
A company with a bright future might need some cash. Let’s say they issue a million pieces of paper which initially sell for $1 each.
In time the idea proves itself and the company makes a profit. Some successful businesses like Xerox circa 1965 or Microsoft around 1985 grow fast enough for their stocks to increase for a factor of 100 or even a thousand fold.
Some investors get rich but many lack the vision and temperament to succeed.
For most purposed, investors should be selected mutual funds.
Here’s an example of funds which have grown at 25% for multiple years.
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Good luck,
- CarlD
Home biz coach
08|May|2009 4collectible webkinz
That is a loaded question!
Even though we are going through one of the worst crisis in the history of the stock market this is a wonderful time to be involved in it if you’re a Sophisticated Investor.
This situation will create amazing buying opportunities so learn all you can about it ASAP but do not put a penny in the stock market until you are as knowledgeable as you can be and by investing on paper for months. Remember that “paper investing” is a lot easier so the idea here is to test plans and not your instincts.
If you do that you will deal with fear and greed and trust me this is the fastest way to loose it all and the question is not if it will happen but how fast!
I hope we’re not scaring you here but if you take one thing from these answers let it be that gamblers don’t survive very long but people with knowledge and discipline thrive…
If you want help I provide a lot of free information on my site at:
and also you can get some free at websites I mention below
lerch
19|Jan|2010 5read and read and keep reading a ton of books
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