Joseph Uglietto has been following the stock market since he was a young boy. While most kids were trading Pokemon cards, Joseph was analyzing stock market movements.
He was really fascinated by everything about the stock market, trying to understand what it was all about and what made a particular stock price go up one day and then down another. Once his knowledge of fundamental and technical analysis strengthened, he was able to start picking stocks that would perform over the long-term.
Joseph Uglietto thinks everyone, whether you are investing in stocks or not, should have a basic understanding of the stock market. It is important to understand how the stock market works and how it plays a role in our economy. That is why he has added some stock market basics below. He hopes that this will help you appreciate the stock market and guide your stock choices moving forward.
What are shares?
Shares are units or pieces of a company that you own. The more shares you buy, the more of the company you own.
Why would a company sell shares?
A company sells shares so they can make money to help better their company or product. Some reasons may be to:
- Hire more employees
- Invest in research & development
- Improve their product
- Make more products
What is the Stock Market?
Simply put, the stock market is where stocks and bonds are bought and sold.
How Does the Stock Market Work?
You buy stock shares in a company at a set price (hopefully low) and then you wait and watch the price of that stock over time. The goal is to obviously buy low and sell high, but unfortunately, it is a gamble, because if the stock rises in price you make money, and if it falls in price, you lose money.
How Does the Stock Market Affect our Economy?
- It allows people like you and me to have a chance to invest in a company that we would not normally get to be a part of.
- If successful, it allows corporations to gain an edge over their competition. The more money (capital) they make, the more money they are able to spend.
- The more people that invest in listed companies, the better because it indicates that investors believe in these companies and that leads to financial growth for our country.
There is a lot more to the stock market and how it works, but the above are the basics. If you would like to learn more, visit The Balance.
