The stock market is a huge, complex world out there that can be a little intimidating to enter. There are a lot of rules and regulations you need to know before diving in, but also plenty of advice from professionals if you’re willing to take the time to find it. Here’s what you don’t know about the stock market!
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The Legal Implications Involved
When you buy a share of stock, you are becoming part-owner of that company. You may not see it as such, but the implications are pretty major. When engaging in this business with another person or entity, make sure you read all the fine print to know exactly what your rights and responsibilities are. You will also need to understand what a restricted stock opinion letter is as it’ll be required by your legal counsel for due diligence. Other legal implications involve the consequences of insider trading. If you make a trade on confidential information about an impending merger or buyout, and the deal collapses, the Securities Exchange Commission (SEC) will probably come knocking.
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It’s Not Always About The Money
When you buy stock, it’s understandable that you might comment on how much money you’ve made (or lost) in the stock market, but remember the goal of investing is not to make as much money as possible, but to make intelligent decisions with your money based on sound research and advice from experts. Investing in the overall financial health of American companies can help contribute to national growth. You can even invest in bio-fuel stocks if that interests you! Although investments are made to increase wealth over time, there are other smaller goals related to economic growth that could have an impact on this country.
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The Impact That Your Buying Power Has
If you have some spare cash lying around and want to start buying stocks today, then congratulations! You have just become an investor. However, beware: this is a risky investment and if you’re willing to put money into something without doing enough research first, there’s a chance that you could lose all those funds overnight by investing them in a one really bad choice. That’s why it’s important to remember that, no matter how much you’re investing, your buying power can still have a significant impact on the market. The impact is even greater when lots of people invest in the same stock.
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The Stock Market Can Move Quickly
Although some people think that the stock market is a sluggish beast that only moves once every few months, they would be wrong. In reality, the stock market can move quickly – and sometimes unexpectedly. For example, in 2008 the stock market crashed due to the housing crisis, and many people who had invested lost a lot of money overnight. This is just one example of how the stock market can change very rapidly, so always be aware of what’s happening in the world around you before making any decisions about your investments. One thing you need to realize about the stock market is that it’s incredibly volatile. This means that the prices of individual stocks (and the market as a whole) can go up and down very quickly, often for no discernible reason. Don’t be discouraged if your stock takes a sudden nosedive – it doesn’t mean that you made a bad decision, it could just be a sign of volatility in the market. Ride it out, do some more research, and make a new decision if you still feel confident in your original choice.
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It Can Be Manipulated
Did you know that you can manipulate how the stock market performs? Well, it’s true! Some people set out to create false inflation within the market to drive prices down and then scoop up shares of undervalued stocks. It’s called “pump-and-dump,” and is illegal, but does still happen. For example, you might hear about some exciting new product or technology on the news or from a friend who invests in this field. You read further about it online and get enthusiastic about buying shares of this company’s stocks. Before long enough other investors have bought into your enthusiasm – just like you did – and the price of their stock increases significantly overnight. The day these individuals simply sell all of their shares and drive the prices back down they have made a pretty penny at everyone else’s expense.
One other example might be when someone starts buying up all of one company’s products to drive prices up or simply corner the market. Although these practices are illegal now, there was a time when it wasn’t – which means that if you had fast enough fingers or a lot of money to cover your tracks you could pretty much do whatever you wanted with a company’s stocks. This led some people into thinking that they would never have to work again – just sit back and watch their stocks grow exponentially – but as we know, trickery like this doesn’t last forever.
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It Can Be a Lonely World at Times
You might think that going it alone is the best way to create a portfolio for yourself, but doing it without any advice from professionals can leave you working in pretty dangerous territory. Studies show that 90% of people who try to actively invest in the stock market end up losing money instead! So even if you’re brand new and don’t know much about investing or trading in general, consider paying a professional a few bucks for some advice before getting started on your own. That way at least you’ll be able to steer clear of making potentially costly mistakes early on in your career as an investor – because landing on the right side of the stock market is all about making smart and informed decisions.
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The stock market can be a daunting place for beginners. With so much information out there, it can be tough to know where to start – let alone make money! There are a lot of rules and regulations you need to know before diving in, but also plenty of advice from professionals if you’re willing to take the time to find it. Here’s what you don’t know about the stock market!