Looking to start investing and grow your money in the stock market? This is a beginner’s guide to the stock market.

The stock market allows you to make money in many ways – both in short-term and long-term. The stock market may appear intimidating and counterintuitive to newcomers, but we’re here to help. We consider the stock market as the world’s largest opportunity machine, and we think that everyone can use it to their advantage.

BASICS

What Are Stocks?

Stock: a share of ownership in a company.

When you purchase a stock, you are purchasing a small portion of the company. The stock’s value rises or falls base on how well the company performs financially.

What is a Market Cap?

Market Capitalization is the current worth of the entire company

Number of Share × Share Price = Market Cap (Multiply the number of shares a company has and their value you will get the market cap)

Market cap is also used to rank companies. Biggest market cap = World’s Largest Company

Stock Price

A company’s stock price and market cap fluctuate in value dependent on how traders and investors purchase and sell the shares.

The Stock Price is determined by the supply and demand for the stock in the market.

• People buying stock > people selling stock = stock price increases (high demand)

• People buying stock < people selling stock = stock price decreases (low demand)

However, the stock market might make be temporarily wrong about a company’s valuation. Therefore the current market may not always be a useful metric to pick a stock to buy.

with that being said, you should invest in the stock market based on where you think the stock is going, not where it has been or currently is.

Recap

• When you purchase a company’s stock, you become a partial owner of that company.
• Market Cap (capitalization) = the current value of the entire company
• Stock Price goes up if the demand is high, and goes down if the demand is low.
• Before making an investment, think about what the next 3-6 months will look like, or possibly longer, depending on how long you intend to hold the stock.