If You Want To Be Rich, We Can Help You! | The Basics of the Stock Market

Growing up I used to tell my mom how much money my baseball cards were worth and she would reply, “They are only worth as much as someone is willing to pay for them.”  This is exactly the premise of the stock market.  There is no authority pricing every single company.  The market allows people to buy and when they want to buy and sell when they want to sell.  Since the volume of trades is so high on the large markets the price at any moment doesn’t change too much unless something big in the company has changed.

In stock market 101 you will be taught cute sayings like “Buy low, sell high” or “The stock market is a voting machine in the short term and a weighing machine in the long term.”  However, these sayings are very big generalities because low and high are relative terms that mean totally different things to different investors and there are enough theories on the accuracy of the stock market pricing to keep business majors busy for a long time. You may end up finding out that you are adept enough to pick winning stocks most of the time.

The most important point to learn about the stock market is that the market itself doesn’t make any money.  The exchange of stocks is what generates cash.  The buy and hold mentality says that if I wait long enough people will see more value in this stock then when I bought it.  The trader mentality is if I buy on a decent deal I should be able to find someone who thinks it’s still a good deal at a slightly higher price.  If I do this enough time I make money without having to wait a long period of time.  Neither way is correct they just require people with very different skill sets.  Determining an investing style that matches your skill set is your key to success. Adn remember, that when someone comes up to you for tips on stock, you tell them to go learn it themselves so that they can do it on their own.

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