Question on basic stock market money making?

Question

I'm fairly new to the stock market world, and i understand how you make money on stocks. I understand how you can make money on a short term gain if the stock say goes from the pennies and shoots up in a short time. But i've always wondered how you make money on big companies over a years. They say you should invest long term and hold it for 15, 20 years. But i was having trouble seeing that because even big companies have low stock prices. But i think i understand it now. Is it basically the same as buying a Gov bond, low risk low reward. Like if i say invest in Google that's already big, will my reward may only be say $1500 over a 20 year period? Again not so much because it was a low risk, like when buying a gov bond?

Answer 1

1

Answer 2

Before you invest any money in the market. You should understand what you are getting into. It is very dangerous to get into something you have no idea about. Once you understand how the markets work, what ETF's are, what blue chip, high growth, speculative, etc. stocks are, you can start to paper trade. After that, you can start to put a small amount of money and then increase these amounts as you begin to understand the driving forces behind the markets. This link provides you with a good source of information regarding understanding how the markets operate. The main driving force behind the market is Psychology so if you understand the psychology behind the markets you improve your odds of winning dramatically. http://tacticalinvestor.com/investing-for-dummies-trade-stock-markets-successfully/

Answer 3

Companies earn money.



Small companies tend to spend that money on growing bigger - advertising, building more factories, etc. But big companies usually just call the money profit and put it in the pockets of the people who own the company.



Which is the stockholders.



Stock prices go up and down based on what people predict the company's future earnings will be. Big companies's stocks don't vary as much because their earnings aren't as affected by day-to-day news. When you buy a company like Google, you should expect the stock price to stay fairly constant (or constant-adjusted-for-inflation). Your earnings come from the company's profits.

Answer 4

I'm within my 30s... You need direction because you are all over the place so get yourself a vanguard total tock market index fund , Vanguard ROTH IRA and contribute to your company 401k(never pass on free money)



I'm loving oil and I have been buying aggressively. I talk about oil so much that my cousin have brought midstream oil investments which is yielding her 7% while the oil sector market does what it does...I'm 20% of my net worth invested within oil(approx 500k)... Wife said I got carried away but when it is blood in the streets BUY!!!! Also banks long term will pay off lovely... We can go lower from here but we will be fine longer term so scale in for the short term investors.. Don't dive in...



Enjoy your day...

Answer 5

Start by investing in a subscription then reading specialized financial news about share markets and companies traded for six months.



Interest rates are likely to be low for several years, unless all suffers total chaos.





Most of my trading is short term, retaining some shares as longer term investments, usually as part of my profit.

Answer 6

Individual stocks are too risky. Buy a low-fee (0.05%) index fund ETF that gives you a market return. The market averages about an 11% compounded annual return over a long period of time. Individual companies can go bankrupt.

Answer 7

You should have 15K to $20K to even think about investing or trading in the stock market. One blind side such as a smaller price stock based on the company's one important drug having no big pharma support or just an outright rejection by the FDA.

Answer 8

1. Open a stock broker account

Find a good online stock broker and open an account. Become familiarized with the layout and to take advantage of the free trading tools and research offered to clients only. Some brokers offer virtual trading which is beneficial because you can trade with play money (see #9 below). A great tool for comparing online brokers can be found at StockBrokers.com.



2. Read books

Books provide a wealth of information and are inexpensive compared to the costs of classes, seminars, and educational DVDs sold across the web. Here on the site we have a full list of 20 great stock trading books for investors to consider. My personal all-time favorite is How to Make Money in Stocks by William O’Neil, founder of CANSLIM Trading which is pictured below.



3. Read articles

Articles are a fantastic resource for education. Our free Stock Education page here on StockTrader.com lists over 100 unique investment articles broken down into categories. Recommended websites for investment education are investopedia.com and of course Google search.



4. Find a mentor

A mentor could be a family member, a friend, a past or current professor, co-worker, or any individual that has a fundamental understanding of the stock market. A good mentor is willing to answer questions, provide help, recommend useful resources, and keep spirits up when the market gets tough. All successful investors of the past and present have had mentors during their early days.



Forums can be another source for question and answer. Two recommendations include Elite Trader and Trade2Win. Just be careful of who you listen to. The vast majority of participants are not professional traders, let alone profitable traders. Heed advice from forums with a heavy dose of salt and do not, under any circumstance, follow trade recommendations.



5. Study the greats

Learning about the greatest investors of years past will provide perspective, inspiration, and appreciation for the game which is the stock market. Greats include Warren Buffett, Jesse Livermore, George Soros, Benjamin Graham, Peter Lynch, John Templeton and Paul Tudor Jones, among others. One of my favorite book series is the Market Wizards by Jack Schwager.



6. Read and follow the market

News sites such as Yahoo Finance and Google Finance serve as a great resource for new investors. For in depth coverage, look no further than the Wall Street Journal and Bloomberg. By monitoring the markets each day and reading headline stories investors can expose themselves to trends, 3rd party analysis, not to mention economic concepts and general business. Pulling quotes and observing fundamental data can also serve as another good source of exposure.



TV is another way to monitor the market each day with CNBC being the most popular channel. Even turning on CNBC for 15 minutes a day will broaden an investor’s knowledge base. Don’t let the lingo or the style of news be a nuisance, just simply watch and allow the commentators, interviews, and discussions to soak in. Beware though, over time you may find that a lot of the investing shows on TV are more of a distraction and are overall full of junk recommendations. This is a natural evolution; you are not alone!



7. Consider paid subscriptions

Paying for research and analysis can be both educational and useful. Some investors may find watching or observing market professionals to be more beneficial than trying to apply newly learned lessons themselves. There are a slew of paid subscription sites available across the web, the key is in finding the right ones for you. View a list of the services I use use myself. Two well-respected services include Investors.com and Morningstar.



8. Go to seminars, take classes

Seminars can provide valuable insight into the overall market and specific investment types. Most seminars will focus on one specific aspect of the market and how the speaker has found success utilizing their own strategies over the years. Examples include Dan Zanger and Mark Minervini. Not all seminars have be paid for either. Some seminars are provided free which can be a beneficial experience, just be conscious of the sales pitch that will almost always come at the end.



When it comes to classes, these are typically pricey, but like seminars, can also be very beneficial. Will O’Neil workshps, Investools, Online Trading Academy, and Bulls On Wall Street provide a variety of courses on investing and trading.



9. Buy your first stock or practice trading through a simulator

With your online broker account setup, the best way to get started it to simply take the plunge and make your first trade. Don’t be afraid to start small, even 1, 10, or 20 shares will serve its purpose of getting you in the game.



If trading with real capital is not possible initially, consider using a stock simulator for virtual trading. A variety of online brokers offer virtual trading for practicing

Answer 9

If you buy good quality stocks and hold them forever, you'll earn 6-7% average growth plus 3-4% average dividend income per year....when your portfolio reaches a million dollars that means you can draw $50-60,000 a year from it and it still never gets any smaller....

Answer 10

Buy lotsa stocks in the big 10 and wait for interest to acrew

Answer 11

invest on paper (write down your thoughts), and see how you do , before spending $$$. start with well respected names like Whirlpool, Home Depot, check yahoo finance for information on stocks!

Answer 12

Invest in smller ones

Answer 13

Yes exactly you can invest in simpler market.

Answer 14

Use.sigma option platfoam

Answer 15

yes