...as if I were a child. What is its purpose, exactly what does it DO?!? I have an inkling of an idea, but I'm still very confused.

It sucks... that is the simple story.

Virtua-cash

aw cmon guys, u dont have anything? LOL

Ok, here i go.

Say u want to start a company, or have one but need capital (money).. you ask a lot of people (investors) to give you money via buying 'shares' in the company. Each investor owns a piece of the company.

As the company does well, the value goes up, hence the stock prices go up. Some companies do profit sharing or dividends.. you can also make money by buying shares low, and selling them at a higher price (when they are in demand).

How did I do?

anemone said:

thanx anemone, that explains it somewhat, but I need more clarification.

LadyCabDriver said:

So there are thousands of companies just like you vying for more profits, and by making it more profitable your company's stock or value goes up-- so more people will invest in you.
The more investors you have, the more you can expand to new markets, the internet, interstate, overseas, etc- bringing in new customers which translates into more profit.

This scenario worked very well in a what they a "Bull" market where people trust the market to bring them a return on their money (by buying at a certain price and then selling at a higher price--$$!).
Right now the US is in a "Bear" market which means investors in general are skeptical of putting their money into most stocks as they feel they'll likely lose $ rather than gain(buying at a certain price and selling lower than that price).

The trick is to foresee what companies or industries will do better and invest in those. There are many strategies to doing well, but this is the most basic.

Just a little advice, if you're looking to invest, it may be wise to start a 401k at your job if you can. They're much less riskier and but build exponentially over many many years--so you can retire comfortably.

Will this b on the test?

The Stock Market can be a great way to earn money, and a good way to lose only what you put into it. When you hold stocks, that means you own a small chunk of that company. Depending on what kind of stock you hold, you may have some say on the decisions that company will make (ex. you would vote on proposals). When you own stock, you have what is also called a share. Each share will cost you whatever the price was at that time (the flashing numbers on the TV screen or what you see in a newspaper). For example, let's say you want to buy some of 3M's stock (3M stands for Minnesota Mining and Manufacturing Company which makes all kinds of stuff). One share is $100.00. You have $500.00. So, you buy 5 shares of the stock. In 2 months the price of a share is now $115.00. The $500.00 you put in 2 months ago is now $575.00. If you want your $75.00 profit, you would sell your stock when it was worth $115.00. The NASDAQ is mostly technology companies. All NASDAQ stocks have 4 letter symbols. Those stock typically are good for a "day-trader" because they fluctuate so much during the day. A stock like 3M would be a good long-term stock to hold because it is relatively stable.
[This message was edited Wed Oct 16 19:19:31 PDT 2002 by Erendira]

thanx, mr. christian.
[This message was edited Thu Oct 17 14:08:08 PDT 2002 by LadyCabDriver]

Junior, this is a fine question. You know how we spend a lot of mommie's money at the racetrack, betting on this or that horse? Well, the Stock Market is a bit like that, but for much more nervous people... They hear a horse fart, and rush to sell their tickets to other people, cuz they think he's too gassy to win. Sometimes, nothing happens to the horsey, and that still makes them nervous, cuz they figure something should have happened and they are very disappointed. So they sell their tickets. They are so nervous that sometimes they arrange to get information that no one else has (or a nice friend just gives it to them), so that they know if it's a good time to sell or buy.

Any other questions?

LadyCabDriver said:

Its really fucked up right now, same with mutual funds

It's boring.
[This message was edited Wed Oct 16 16:23:35 PDT 2002 by Therapy]

glad my note helped u out Lady
[This message was edited Thu Oct 17 14:45:19 PDT 2002 by gatorgirl]

LadyCabDriver said:

I'll Take YOUR Explanation of it...
i have no clue.

Therapy said:

---

Money is never boring (LOL)

Can I tack on a question?

Somebody explain it in a more global sense - i.e. countries that lose faith in our leadership (understandable) & economy, then send our market into a tailspin. How does it work globally? Is this a silly Q?

CalhounSq said:

I don't know enough about that--but i do know the currency of a country($ or lb, or yen, etc) is no longer based on gold deposits(hasn't been since the 30's or 40's) but on the stability and value of your total economy-and little do with your leadership

So, let's say the US economy is sluggish like it is currently. That means the value of the dollar will go down-which can be both bad and good. If the $ goes down, we have less spending money in say Canada or Japan-on imports/exports, stocks, etc. Our purchasing power has gone down. But the Canadians or Japanese now have more purchasing power on US products and services because the Yen likely went up in value. They benefit from that of course, but we also benefit from them buying American products(although at a lower value, but it helps).

Just a side note, wars have been generally good for economies as they create jobs and manufacturing of raw materials and bombs, planes, ships, etc.--our defense contractors in the US are one of our biggest industries. In peacetime, they generally sell to other gov'ts. Sad but true.
[This message was edited Thu Oct 17 7:56:08 PDT 2002 by mrchristian]

mrchristian said:

Actually there's some debate about this; it's actually not good for the economy as a whole for the value of money to go up or down--the ideal is stable money.

Gold is no longer used as a standard, and yet it has the most stable store of value of all commodities. So by watching the DOLLAR price of gold move around, it's not gold that's changing in price, it's the value of the dollar--it's a little counter-intuitive, but it's true.

Calhoun, globally, as well as locally, whenever the leadership makes a stupid decision, the market goes down--information travels through the market much faster than the news or any other medium because money is involved and the smart money moves first. For example, if a giant tax increase were announced this afternoon, the market would go into the toilet.

War is not good for an economy. It does create manufacturing jobs, but only at the expense of other parts of the economy. The net result is some good for some industries, but an overall LOSS for the entire economy, and the goods aren't put to any good use, i.e., they mostly just blow stuff up. However, if the enemy threatens the economy, then war is good because it ends that threat. There are always lots of different component facts like this that go into whether stock prices will go up or down. But during the late 90's boom, there was a very peachful air in the world--Russia had become our friend, 9-11 hadn't happened yet, etc. The market LOVES peace.

Hope this helps...

Therapy said:

LoL!...You beat me to it...

teller said:

That's your opinion and is debatable as you know. We're not economists, so i don't want to get into it. I could be wrong, but i think history supports my theory more than not.

mrchristian said:

That's quite all right, mrchristian...I know my position on this is not a popular one. I also don't want to hijack the thread too far off topic...perhaps another time.

wellbeyond said:

It's only boring if you don't own any stock. As you soon as you buy shares of say, Dell, you start to care about how much money they're making, because had you bought $1000 worth back in 1990, you'd be a millionnaire!

Look at this beautiful chart:
http://finance.yahoo.com/...on&z=b&q=l

Gold is no longer used as a standard, and yet it has the most stable store of value of all commodities. So by watching the DOLLAR price of gold move around, it's not gold that's changing in price, it's the value of the dollar--it's a little counter-intuitive, but it's true.


please clarify on this explaination more.

CalhounSq said:

that's a good question too, calhoun, thanx.

mrchristian said:

cool...ok its starting to make a little sense now...

mrchristian said:

Actually, war is considered good for the economy. Many have thought that presidents have put us into war to get us out of depressions/recessions (ex. President Roosevelt knowing about Pearl Habor and allowing it so we could go into war to boost the ecomony). The reason that in the past war has been good for the economy is that it puts people into work to manufacture war goods (guns, bombs) which causes a decrease in unemployment. Unemployment and inflation/deflation are two main factors that economists pay attention to because they are the factors that have the main effect on the economy.

teller said:

Isn't that a little like saying "Baseball is only boring if you don't follow any of the teams"??..lol If that's the case, then baseball is boring...heh..

LadyCabDriver said:

It's a good question, though I'm not really sure about this one, I can take a stab at it. Our market was moreover sent in a tailspin because people were saving money from 9-11. People were saving money, and when that happens, it causes businesses to lose out. Shopping and spending money are important for an ecomony to survive and grow, mainly because the value of the American dollar is placed in the hands of the people and how we use our money. Also, in the US we have many other country's businesses here. A Japanese company may have multiple manufacturing plants here in the US, and when we don't shop and by their goods, they are being effected in Japan. That situation can take place in many other countries as well. Hope that makes some sense.

subyduby said:

This one is hard to explain, too. The value of the dollar has nothing to be backed upon (not gold or silver). The value of the dollar is placed within the people. We determine what a dollar is worth by the ways we use it. A long time ago, (lol, I don't know when, maybe 1930s, whenever the Gold Standard was around) gold and/or silver was used to back the value of money. Gold and silver determined how much a dollar was worth. I don't remember why the US decided not to use the Gold Standard anymore to hold the value of money, (maybe because people were hoarding it) but I think it was a wise decision. So, the comment above is saying that even though the value (determined by price) of gold may seem to be fluctuating, it is actually the dollar's value that is fluctuating which may cause one to think the value of gold is changing a lot more than it really is. Hope that's right.