the stock market for dummies

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1、TheStockMarketforDummiesThestockmarketisaplacewherestocks,bonds,orothersecuritiesareboughtandsold.Whenyoubuystocksorsharesinacompanyyougainpartownershipinthatcompany.Intoday’sworldpeoplebuystocksinordertogaindividendsonmoneythattheyhaveinvested.Somea

2、dvantagesofbuyingstocksoverbankdeposits;money-marketfundsorbondsarethatstockshavealonghistoricaltrack.Althoughthedisadvantagesofbuyingstocksarethatthemarketfluctuatesveryoftenandthestocksareneverguaranteedsoyoumaylooseallofthemoneyyouhaveinvested.Bef

3、oredecidingonwhattypeofstockyouaregoingtopurchase,youmustdeterminewhattypeofinvestoryouare.Therearetwotypesofinvestors:techniciansandfundamentalists.Techniciansareinvestorsthattendtobuyandsellstocksveryquickly.Theseinvestorsarenotinterestedinbookvalu

4、es,dividendsorearningalthoughtheystudythepricepatternsofthatcertainstock.Fundamentalistsareinvestorsthatlookforlong-termgrowthinacompany.Theyconsidersuchfactorsasearning,dividendsandbookvaluesandareasinterestedinthepricepatternsbecausetheyareinforlon

5、gtermgrowthsotheyknowthatthemarketwillfluctuate.Whenyouarebuyingstockstherearethreedifferenttypesthatyoumaychoosefrom:pennystocks,growthstocksandbluechipstocks.Pennystocksarestocksfromacompanythathasalmostnochanceofdevelopingintoabigcompanyandthestoc

6、ksareofverylittlemonetaryvalue.Thesestocksforexamplewouldbeachainoflocalpizzastoresthatwouldnevermakeitintothebigmarketofrestaurants,suchasPizzaHut,butwoulddowellinit’slocalmarket.Growthstocksarecompaniesthathaveahighpotentialtoachievegreatsuccess,bu

7、ttheycanalsobeveryriskyinvestmentsbecausetheynotarewellestablished.Anexampleofthistypeofcompanywouldonethatinventsaproductthatmaymakeabigimpactonthemarket(similartowhenairbagswereinventedthosestocksprobablyrosedrastically).Thesestockswouldbetheinterm

8、ediatelevelinthepurchasingofstocks.Thehighestlevelofstockpurchasingisbuyingbluechipstocks.Thesestocksareofcompaniesthatareverywellestablishedandhavealmostnochanceofits’stocksdroppingdrastically.SomeofthesestockswouldbeofcompaniessuchasMcDonald’sCorp.