The Basics of the Stock Market
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The stock market is a network of traders and investors, buying and selling shares in certain companies to create a profit. It serves as a way for people to invest in companies in exchange for a part of that business such as partial ownership or dividends. Dividends are what is paid to shareholders either in the form of money or extra stocks as a business grows.
How does the stock market work?
The stock market is a place for the transaction of shares and stocks which is based on the law of supply and demand. For every transaction made, there must be both a buyer and a seller. Simply speaking, if there are more buyers than there are sellers, the stock price will go up. Therefore, if there is more stock being sold to less buyers, the stock price will go down.
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Stocks can provide both short-term and long-term income for many people. They can invest in stocks to try and earn some of the money that is made from owning stock that grows in value over time. Stocks can both grow and depreciate over time. This helps determine how much they cost, and the profit made from their sale. For example, if a business starts out small and an investor buys stocks of that business, as the business grows over time, so will the value of the stocks the investor purchased.
A retiree might want to invest some of their money in order to increase the money they have to live off over the rest of their life. However, this comes at risk since it is always possible for a business to go downhill, resulting in the devaluation of its stock.
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What are the different types of stocks?
There are a few different classifications for types of stocks which display their pros and cons as well as who should invest in them.
Income stocks are stocks that offer regular and steady income which tend to be in the form of dividends. These are low-risk and require a low amount of management and activity. These can be like a lot of growth stocks and an example of a company like this could be Microsoft (NASDAQ: MSFT).
Growth stocks are stocks that are presumed to have a high potential for growth for the foreseeable future. These tend to be centred around innovation and technology types and tend to have more growth companies due to the constant innovation in the space. These can be high-quality companies such as Netflix (NASDAQ: NFLX) or Amazon (NASDAQ: AMZN) but can also be smaller companies.
Value stocks are stocks that trade at a price below where it appears it should be. Stock value may have dropped due to several reasons such as where the business might have undergone a scandal with their CEO, painting the company in a bad light.
How does Marcus Today incorporate income, growth, and value stocks into their model portfolios?
Marcus Today provides subscribers with a vast range of information about how, when, and why to invest in certain companies to create a profit. Our portfolios showcase the latest information about choosing an investment type based on what works for you because each of our investing portfolios showcases a different way of investing.
This portfolio is designed for those who want to invest and create stable income over a long period. These investments don’t require a lot of maintenance effort and are very safe. This allows you to leave them and check up on them occasionally if you don’t have the time to constantly maintain them.
The Long-Term Growth Portfolio is designed around a group of stocks that outperformed the others in their area over a long period. It is designed to be very low maintenance and last a long time. These are the stocks that you can hold onto until they go wrong.
The Strategy Portfolio is targeted towards the investor with more time to spare. These investments require more frequent check-ups and are centred around buying stocks at the right time in the market to get the most value. This portfolio is updated more regularly than the other portfolios to accommodate the rapid changes in the market.
More about the author – Travis Le Packham
Travis Le Packham is a highly-recognised stockbroker and business media personality. He founded the Marcus Today Stock Market Newsletter in 1998. The business has built a community of like-minded investors who want to survive and thrive in the stock market. We achieve that through a combination of daily stock market education, ideas and activities.