The Stock Market for dummies. Exactly what it is.
This isn’t a guide about how to earn money in the Stock Market but an explanation in simple words of this term.
First of all, in this article, you aren’t going to find a method to make safe operations in the stock market. There aren’t tips, guru names, web sites. No. Neither history nor data. Here you will learn once and for all what is bought and sold in the stock market.
Company’s shares and Speculation.
It seems obvious, but most of the time the obvious things are the least clear, aren’t they? So what are shares and what is speculation?
The company’s shares: are a company divided into pieces. Like a Lego? Yes. For a company to split into shares (pieces) means that it has become very big. So there it’s a single owner anymore but many of them. Suppose that we, the legitimate owners of company “A”, decide to divide it into 100 shares, and we keep 51 shares and put the remaining 49 shares up for sale. These 49 ones can be bought by one, two, three, four, or 49 different people. So these ones will have as many quantities of the company as shares they have.
Wait a minute, are you saying that they break the company, the machines, the people, the merchant, the goods, etc? No way! The only thing that is divided here is the ownership of the company. When an enterprise becomes public, (in English this means that is in the Stock Market), the shares (pieces) can be bought or sold independently of the company’s activity. And the price of those depends on The Market (by the way I got an article in Medium called Neoliberalism for Dummies). And you know how the market works. Lots of people want “A” shares, the price of “A” shares goes up.
Speculation: is to buy something with the only target on the mind of earning money by selling it more expensive than it was bought. If you buy a car to commute to your work you are not making a speculation. But, if today you buy a car from a desperate person for a very low price, and tomorrow you sell this car for the double price you paid, my friend, you’re doing speculation.
And this is crucial to understand the meaning of the Stock Market. You buy shares with the only target of selling them, as fast as you can, even automatically.
And what about the traditional trade? Don’t they buy tomatoes at $1.00 and sell them at $1.50? Isn’t it the same thing?
This is a very good question. Essentially it is the same, you want to have a profit by selling at a higher price than you bought a good. There are two points that make the difference:
1) velocity. The faster the merrier. Speculation must be fast. From today to today.
2) the nature of the good you’re selling. A company share is not a tomato, the only interest in the purchaser is to speculate again. I mean the final customer never will eat or use the share in another way than repeating the speculation operation.
What about traders, brokers, bears, bulls, yield, dealers, etc, etc?
Internet has plenty of definitions for these terms, so google them. If you already understand what does Stock Market means, I’d like to give you the answer to this question: Can I earn, as a worker, any money in Stock Market, forex, cryptocurrency? Keep reading, please.
Can I earn, as a worker, any money in Stock Market, forex, cryptocurrency?
The quick answer is no. The stock market is not for you millennials living at home with your parents, nor for you graphic designers who are going to pay for college for the next ten years, nor for the bus driver, nor for the teacher, etc, etc, etc. My cousin Walter is taking an online course on forex and he says all you have to do is study the charts. Gee, tell the poor cousin, that he should spend that energy (he sure has a lot of it) on a more valuable thing. Take a look at any of these online courses, behind all of them you notice the shadow of a pyramid business.
They talk about diversification. You have to spread your eggs. One egg in cryptocurrencies, one in forex, buy some Apple shares, and — of course — try to sell this course to others. Here’s the point. These courses focus on, and only on, selling the courses. Selling the hope that you can give up your life and your dream to fly into space with Bezos and Gates.
Normal people never will become rich by “betting” in the Stock Market these poor $5000 they could save.
Ok -almost- nobody will be rich, but The Stock Market isn’t the evil, right?
Another very good question! Wall Street isn’t Satan! But if speculation is the way, if the only thing that matters is the fast profit, and if every good, everything in the world can be simplified to an inoffensive piece that you automatically can buy/sell… what about with the real things in the world? With the workers in the company, you’re having the shares, the food prices, the money values, the houses, ultimately with the real economy? Well, just check the history of the world and you have a proper answer.
