Stock Market Basics: What you should be doing ASAP!

Rich people are the cornerstone of modern society, which is the reason why poor people are often so jealous of them.

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Contrary to popular belief, the stock market is not the primary means through which economic terrorism takes place, nor is it a trap set up by the big-money boys. The system has been employed by almost all anthropologically stimulating civilizations so, “IF YOU DON’T LIKE IT, COME UP WITH SOMETHING BETTER? BITCH!”

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On a more serious note, if you (like myself) are a depressed nine-to-fiver, who’s looking for a way to make money quick, then trying your hand at buying stocks is certainly the way to go. So, if you’re really interested in investing, but are hopeless with stocks entirely, memorize the following lines, because this is going to be your assignment or the rest of the month.

• Firstly, choose an interesting company. After that, type sec.gov in the address bar, and type the company’s name. After that, select ’10-K’ which is the annual report of the company. Then, in another browser window, do the same thing, but instead of the annual report, choose the ’10-Q’ option or the quarterly report of the said company. Do nothing after that.

• Just kidding! You will have to read the first ten to fifteen pages of the 10-K report, as it will give you an idea of how the company has performed over the past few years. Forget the rest, the goal here is not to overwhelm yourself with information, but rather to form a mental image of the performance of the company.

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Types of Stocks

Okay, so there’s more, a lot more!

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Dividends

Profitable companies which are publicly owned often choose to distribute their earnings to shareholders by paying dividends. A dividend is a fixed dollar amount of a company’s share, which means, the more shares you own, the more money you will receive. You can either receive payments in cash or you can reinvest them in purchasing more shares of a company. The stocks that pay dividends which are higher than average are also known as income stocks.

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Capital Gains

During each trading day, stocks are bought and sold by investors constantly, and as a result, their prices constantly change. When you sell a stock at a price higher than what you bought it for, the profit you make is known as a capital gain. On the flipside, if you sell your stocks at a lower price than what you initially paid for, it will be called a capital loss.
It’s important to remember when you invest in the stock market that stocks are cyclical, and move from strength to weakness and back to strength over time. This cyclical pattern, known as a full market cycle, recurs continuously, though the timing isn’t predictable. Sometimes it takes only a few months. At other times, it may take years.

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When to Pull Your Loot

The performance of stocks have always been influenced by what’s going on in the overall stock market, that is, is the market in a rally or is it a sell-off. These are more commonly known as being a bulls or bears market.
Faced with the ever-present danger of your family leaving you, and you losing a possibly large amount of fortune within a blink of an eye, you will need to prudently sit behind your monitor and check out the market conditions. The frequency of the dividends, along with the size of the capital gains will be determined by how well the company is doing at the time. However, if a company has not been profitable, your shares will be worth a lot less then what you may have paid for them. Positive or negative news coverage can affect the stock prices of a company.
It is important to remember that this is not a game, it is your one-way ticket to the closest thing to the executive lifestyle. So, as long as things look normal at the Federal Reserve System and the nation’s central bank, it’s okay, but if you find that you’re suddenly not registering a pulse, it’s time to pull out, pronto.

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Building a Portfolio: Stay in the Middle of the Road

Speaking of pointers, putting all your eggs in into one basket doesn’t work every time. Try putting your money in high-risk, high-reward investments, such as venture capital or clean energy or bio-tech start-ups. While the high risk side will expose you to the big payoffs, the low risk sides will protect your investment from the Black Swans.
Recurring continually, the cyclical pattern of the stock market, more commonly known as the full market cycle, should also be kept an eye on. Although not predictable, when people begin to by a particular stock, its price tends to rise, this is what offers the potential of making a profit. If you’re feeling a bit antsy about the current domestic market, international markets are worth a look, particularly the oil producing ones. And we all know where oil’s headed for the long-term.

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Get Some Expert Help

A stockbroker is a human being who helps you buy or sell shares. Stockbrokers are usually referred to as the middlemen. This means that they usually stand in the middle, that is, between you and the money you can make. Now that we got that out of the way, without this middleman, you’d never get far while buying and selling stocks. These guys know more about stocks than you can I do. They are calling the big boys, asking the questions and getting answered (or hung up on!). Aside from the inevitable screw-ups, having a keen sense of market timing and knowledge of companies under their belt, you can learn a lot from them. But beware, a stockbroker has always been known to have more excuses than a President of a third world country who promised to step down after eight years.

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Oh, the Places You can Go

Most people think too much before making an investment. With big goals of buying their dream car, or even maybe purchasing a vacation home by the lake, and putting their accidental offspring through college. They sit around in their dingy lit offices and stare at the scene outstretched before them, which quite frankly, only resembles a vanitas painting of the high renaissance, that is, everything decays eventually.

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So, stop procrastinating, keep your antenna up for sudden changes in the stock market and start today!

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