Why Is There Any Demand on a Stock Market?

Why is there any demand on a stock market?

Why Is There Any Demand on a Stock Market? 1

Good question. In the end, a company could get bought by another company, and this is usually at a premium of at least 20% I would say. Also other investors, usually larger investors like Carl Ichan and such, take big stakes in a company in hopes to change the way it does business. They can nominate people for Board of Directors, or just push for internal change within the company in hopes of increasing shareholder value. I think most people who buy stocks in hoping that they appreciate in value are counting on earnings growth from that company to help raise the share value. They can look at what one company sells for based on earnings and their growth rate and compare it to a similar company, and try to find the better value between the two which would be more likely for a takeover offer or future dividend payouts. Other investors invest in dividend paying stocks (think MO, PG) just to earn the income and have some upside potential from price appreciation, which you do not get from bonds.

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How to make money in the stock market?

Why would a beginner pick stocks priced under $5 to invest in when most pros avoid it (the pros want to make money... perhaps you have a different goal)? Are you aware of the liquidity problems with many penny stocks? How many books have you read before deciding to take on Penny Stocks? Did you know that most Penny Stocks are under $5 because of serious financial problems. Do you know why Penny Stocks are also called "story stocks". It's because they have such a great story.... that it sounds like you would have to be an idiot not to invest in them!!!!! Unfortunately, it's rarely the full story. Hopefully your Risk Management skills are significantly better than most! In short: Dad is 100% correct. Good luck.

Why Is There Any Demand on a Stock Market? 2

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Get Rich in stock market?

As others have said research and education. Tips off the net? Well if it is there others are way ahead of you. You have to instead think about what people will want or what the trends may be. Plus you have to look beyond the obvious. Say you pick a computer company. Think about who makes all of the various parts for them and even several companies. Say someone comes up with a better version of Ipod. The company that makes the parts will still be selling parts for the new version. Or even better....... a few months ago I bought some stock in a small little food manufacturer. The process the food and package it for restaurant chains, many companies like Sara Lee and airlines. I bought at 7.00. They announced that they recieved a loan to put in a new line and double production. Now it is around 14.00 and once they get going it will go up further. No matter what happens people will still buy food. And lastly slow and steady as there is no get rich quick. Daytrading and trying to make the fast buck is for those who want to lose their money for the most part.

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Before stock markets open, there are some "future" reported, what is it?

Stock index futures are cash-settled derivatives contracts that trade on global electronic exchanges. The S&P contract for example is a contract on $250*index level. For each futures contract there is a long (who wants the index to go up) and a short (who wants it to go down). For each point that the index goes up, the long makes $250 which is lost by the short and vice versa. The futures trade actively prior to the opening in the morning because Europeans and Americans who get to work early are trading them prior to the market opening. When the market is not open the futures trade as a guess at what the S&P is going to be when it opens (almost). When both the exchange and the futures are open, there is a dance between them as arbitrage machines try to keep them aligned (actually the machines try to make money but that keeps the stocks and the futures aligned). You will sometimes see "Fair value" of the S&P from the futures contract. It turns out that the futures value should not be exactly the same as the value of the S&P for some reasons beyond the scope. However you can use a risk-free interest rate and a dividend yield of the S&P to get what the value of the S&P should be from the futures contract. That is the "fair value" However, if the futures contract is down 2% from the previous days close, expect a butt-whumping when the market opens. Edit: No futures contracts are not call options which are a different derivatives.

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