April 4th, 2006 07:16 EST
Do you know what the stock market is?
All of us have dreams about our future and every one has his own dreams about his life including marriage, family and career; but the money is the only dream that all of us share in. But in reality, we spend a long time of our lives thinking about how we can be rich, and about a safe way to make money avoiding the costly mistakes. So we can say that one of the most serious decisions in our life is the investing decision.
Stocks are one of investments many varieties, but the stock market can be a great source of confusion for many people because most people don't fully understand stocks. People's experiences are based on stories and conversations with their family or friends, and they mostly like to tell emotional stories about people lost their money in the stock market and about the fears and risks surrounding this field, but nobody was interested to say that some one makes success and money with stocks.
On the other hand, any field become easier when we understand how it work and what is the basic ideas and rules which control the system, so before we takethe decision to experience the stock market we need to know many things which give us the real picture instead of taking our decision depending on imaginary opinions of other people.
Some of the questions becomes in our minds are; what is the meaning of being one of the stock holders of any company and what is the power of this stocks and if you are a stock holder that means you become an Owner of the company and your vote will make a difference in the company's decisions, to answer all of these questions and many more we need first to know what stocks are.
We need to know that Business is the cornerstone of every economy, all the major corporations and companies began as a small work and after years of efforts it grew up but still any project needs money to rise; however there are two sources of funds, one of them is to borrow money from banks or from somebody by taking a loan with high fees or selling part of the stocks.
Stocks are certificates that show you own a small fraction of a corporation, which mean that the certificate is a piece of paper that is proof of your ownership, or on the other way we can say that stock is a share in the ownership of a company which called shareholders. And when you become a shareholder you will have a claim of every thing the company owns, but it doesn't mean that you can sell any thing which belong to this company and also you can't give your opinion of managing the company except your right to vote in election of the board of directors at annual Meetings.
Besides, we need to know that there are two types of stocks "common stock" which is the kind we all know or prefer to deal with, Common shares represent ownership in a company and a claim on a portion of profits, and "Preferred Stock" which give you some degree of ownership but not the same rights of voting, and the type of stock is depend on the system of the company.
After you buy the stock you need to know how to trade it and how these stocks can help you collecting money, some people prefer to leave this responsibility to stockbrokers to sell or buy stocks (exchanges) and this operation called trading and the place of these transactions is the trading floor, but there is different way to trade stocks by using the electronic way that’s mean to use the internet to sell and to buy stocks.
But how can we know that the stocks of this company is better than others, and why people like to buy some company's stocks and refuse the others, this belongs to some reasons, for example a company's annual report, financial statements, and also the published news about the company in the newspapers or the television. all of this factors affect and cause the daily changes of the prices and the tendency of buying the stocks.
Finally we can say that there is no risk to invest in the stock market if you learn how to deal with stocks.