Investing in stocks works like real trade, which is buying something and selling it.
“how does investing in stocks work”?
Which is something like a stock you buy low and sell high to make a profit. To make you more clear on how it works, let’s take a look below clearly everything step by step.
What is the Stock market:
The stock market is a waiting machine, its run depends on which side has more wait.
What is Stock?
stock is a group of shares.
What is a share?
Share is a part of the ownership of a particular organization.
what is the organization?
An organization is a group of people who work for a certain purpose. Which is called a business or government department.
Why is that government department or business listing their shares as stock?
Because they need money.
Why do they need money, when they don’t have it?
No, they have it, but they don’t have enough money to raise their capital for their purpose.
So how do they list these shares of stocks?
They are listed through the exchange market.
Who is the exchange market?
They help all organizations to exchange their share of stocks for money from investors.
So how the share value are determined for this organization?
The value of the stock depends on the organization’s worth.
How do I know the worth of any particular organization?
You have to learn, how to value any organization’s worth of share.
Once I value it, if I need to buy any stock, how can I?
You Can directly buy at your needed organization or through brokers.
Who are brokers?
They take a commission whenever you buy or sell any stock through them.
Its moves depend on which side has more wait.
Why it’s moving on which side has more wait?
Because that side contains more money.
What do you mean side?
Up (or) down.
How the stock moves up and down depends on its wait.
when investors buy and sell any stocks. If any of the buy or sell sides have more sellers or buyers, then the stock moves on its majority side.
Then, when does the stock come to its true value?
It’s come soon. But you want to find and know the value of that organization.
So, does stock price never truly depend on organization value?
No
Why does it not drive depending on its value?
Because it’s irrational.
But, why does the market theory say the market is always rational?
I don’t Know, but it’s irrational.
What do you mean by rational and irrational?
Rational means the market is moving with reason of method.
Irrational means there is no reason. It can move any side at any time.
How did you tell it’s irrational?
Just invest. Then you will know it is irrational.
How can I sell that share, if I need to sell, does the company buy it back?
Of course, investors can buy your sold share.
Stock investing conclusion:
If you want to be a good rule investor without understanding how stocks work.
You will likely lose all your money in the stock market. Because the stock market is full of fear of risk place.
However, you have to understand the full fundamentals of your stock-bought organization and also read everyday news related to that particular company to know that the industry has such bad or good news.
Whether you bought one share or one million shares doesn’t matter, once you bought any company share, then you have to act and think like the company owner because you didn’t own just stock, you owned ownership in that certain industry.
Finally, I like to know if you’re struggling financially in your life. Then I am likely to help you. Please contact me on the contact page and share your life struggle story and soon you will get my reply from my email for your struggling problem.