The A To Z Of Stock Market Investing

The article is about The A To Z Of Stock Market Investing.

The A To Z Of Stock Market Investing

What is a stock market?

A stock market is a market for the buying and selling of stocks and shares. These stocks and shares are a sort of instruments issued by the company to raise capital. A company cannot borrow or generate huge amounts through profits. Hence, it offers its shares to the public for subscription.

What is the meaning of stocks for you?

Stocks of a company entitle you to be a part owner of the company. You become a shareholder of the company and also possess the right to have a say in the decision making of the company. There are two types of shares issued by company- equity and preference shares. A stock is a bundle of shares.

Equity shares give you decision making capacity. On the other hand, preference shares entitle you to have dividends before equity shareholders in case of liquidity.

Stock market index

Stock market index is used to monitor the fluctuations of stock prices. These are generally weighted price indices with continuous reviews.

Investment strategies

Stock market investments are guided by many techniques and strategies. Some of which are:

Fundamental analysis- fundamental analysis is the proactive task of analyzing the financial capabilities of the company in terms of stock market investments. This analysis is done through various financial tools like ratios, earnings, turnover and other such methods.

Technical analysis- technical analysis makes an estimate of the macro-economical forces leading to turbulences in the stock prices. It measures not only the present values but also anticipates the futuristic trends and projected figures through the use of charts and graphs.

What is meant by bearish and bullish market?

Bearish and bullish-these are two most common terms used while trading in stock market. A bullish market refers to a market which is anticipated to rise or generate profits in the near future.

On the contrary, a bearish market is supposed to take a slow down with falling prices and consequently the profit margins on the investments.

Risks involved in stock market investments

Generally investors do know about stock market investment basics but are not aware of the risks involved in these investments. Risks in this market originate mainly from ignorance and sheer irresponsibility on the part of the investor to have a careful watch over his own funds.

Risk aversion should be the foremost policy to be applied in stock market. Diversification of portfolios and also investments intermittently are the success factors in stock market investments.

You know that you cannot carry on the daunting task of managing your portfolios and seek help from professionals. But they are professionals in money-making too. Do not rely on them so much that you lose control over your own money.

Choose investment guides or firms which are reliable and expert enough in understanding the market trends. Also, do invest in gold and silver and hedge funds to ensure a regular supply of returns and dividends. Depending on only one kind of stocks or in just one sector can land you in trouble during times of recession.

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