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What is the stock market? When was the stock market created? How does the stock market work? Best things to know about the stock market before investing.
If you are new to the stock market. You should know so many things before investing in the stock market.
I will guide you.
What Is The Stock Market?
The stock market is some exchange that allows the public to buy or sell company shares. The exchanges are formal and also done under some regulations. Traders buy and sell shares for their profit.
The New York Stock Exchange is the largest in the USA.
When Was The Stock Exchange Created?
You may wonder when the stock exchange was created. And how did it work in those days?
Let me tell you. There was no single trading in the first sock exchange for decades.
In the 1300s, Venetian Moneylenders was the first ever organisation that sold debts to individual investors.
In the 1500s, Belgium’s exchange handled the company shares and bonds.
In the 1600s, the revolution came through the hand of the East India Company. It issued the stocks to the public. It was a financial boom.
Nasdaq, one of the biggest stock exchanges in the US, was founded in 1971. The evolution of the stock exchange started with Nasdaq, which dealt securities electronically.
So, I guess I have given you a stock market summary. Now it’s time for some investment.
How Does The Stock Market work?
In simple words, there are a few steps in this process.
IPO or Initial Public Offering, companies list shares of their stocks. The public and the investors buy those shares. This allows the company to raise funds for its business.
The investors can buy or sell those shares.
Best Things To Know About The Stock Market Before Investing.
When I was beginning to start investing in the stock market, I had so many questions. Unfortunately, there was no one to teach me. But I can make a profit from the stock market.
Always do perfect homework. If a company’s shares are increasing, that means the company is doing good. Even a slight increase for a long time is better than a massive increase in a short time.
You should do a good background check on the company. It’s financial reporting, who the investors are, and what are the company’s mission and vision- you should always know this data.
Also, always check the quarter difference. You can have all the data on the company website. The company has good operating stability if you see positive earnings and growth.
The industry is the mirror of investing. A company’s peers are sometimes very useful in knowing the company profile. Look at how the company is representing itself in the market.
Choosing individual stocks in the industry is not an easy task. Before buying the stocks, always check the competition and compare it to the current market.
You can determine the companies based on size, capital, profit, and performance. Then compare these facts and choose.
Debt To Equity Ratio
Even the big companies carry debts. However, that does not mean the company is not performing well.
There is a debt-to-equity ratio that you should know. This tells the company’s debt to market—the number of liabilities by shareholder equity. The number should be 0.3 or less than that.
Before investing, you should always measure the number. Sometimes in the tech industry, the number can be higher. If the debt is huge, then it affects the profit.
Price-earning ratio reflects the stock price of a company’s earnings. So, when you are doing your analysis, the P/E ratio shows the value of the stock.
Sometimes the stock can be overvalued or undervalued. You need to know that before investing in it.
Suppose a company is giving its share at $40, and the profit is $2. Then the P/E ratio is 20. So, you will know whether you invest in it.
You should also see the dividends of a company. Paying dividends is a good sign for a stable company.
You can calculate the dividends with the stock price. And you will know the spike.
There are many cases that a company does with its dividends. Sometimes the dividend is high, and sometimes it can cut dividends, and it can permanently cut its dividend.
There are other things to be considered before investing.
– Leadership is the mirror of a company’s future. Therefore, you should check and analyse the leaders. Trusting in a company’s stock means trusting the people running it.
– The stock market is volatile. You can be rich one day and lose all your money on the same day. So, you should check the company’s stability.
– You should maintain a roadmap of your own. I can tell you to check the facts before investing. But when, where, and how much you will invest. These are completely on yourself.
– You are in the stock market for profit, but you should also always be ready for losses.
– Do not Invest all of your money in the same stock. Instead, try to invest in different stocks.
– Be aware of any fraud persons influencing you to invest in the stock market.
Now, you are almost ready to invest in the stock market.
Do your own research and start investing.
Please feel free to say What I have missed.
By Alina Watson
– a Freelance Blogger and well Content Writer with a little over five years of experience in the industry. I have some creative ideas and share my thoughts through blogging. I am passionate about writing for Tech, Health, Business & Finance Etc. These are my sites Worthy To Share, Proudly Updates, World News Inn, News Stoner.