The Way Stocks Work
April 22, 2009 by Mara Hernandez-Capili
Filed under Stock Market
Stocks are shares acquired from a publicly listed company. As a shareholder, one is considered as a part-owner of the said company and has certain privileges such as voting rights. A shareholder also receives an annual dividend from the companys annual profits. Dividends are computed like this: suppose you were able to buy 1,000 shares of MAC Company and the company has profits of about $7.5 billion annually that possess 750,000 shares all-in all. Your annual dividend would then be estimated to around $10 million. That is just how simple stock works.
Stock Trading is the act of buying and selling of stocks. It is oftentimes called as stocks exchange. The stock exchange is the brilliant and quickest solution for company owners who want to advertise that they want to open their company for sharing. That is the reason why there are exchange floors. Exchange floors are venues where sellers and buyers (traders) meet on one roof- well; those are actually brokers that do the job for them.
The New York Stock Exchange (NYSE) is the biggest stock exchange in America today. In it we can see hundreds of brokers, all in chaotic activity and shouting at each other. Inside the NYSE is a large screen where the current market value and market situation can be seen. It shows the fluctuations and the rise in the market. Stock traders usually see this as an opportunity to sell their stocks so they could gain higher profits.
Stocks are a dynamic financial instrument because it does not possess a specific value. It goes up and it goes down, depending on the companys situation in the market. A lot of traders take this opportunity to sell their stocks in the market for instant profits also financial experts suggest that the best strategy is to buy and hold since there lies the true value in investment.
These are just some of the basics that one needs to learn about stocks and stock trading.
