NEW TRANSLATION (Patreon)
Content
Hello my amazing patrons!!
I've got a new community translate for Tom going! Google Translate is going to try to explain the stock market!! If you'd like to help us out, run the below script through a few layers of Google Translate and see what you come up with! Maybe your line will be in the video :). THANK YOU!!
We're in the process of looking to hire more performers so that we can get GTS up and running again specifically. I won't be a part of that series as I am continuing to work on my own music. But I'll re-join Tom on Explains soon.
MORE DEMOS TO COME!! I've been writing so much recently. I really appreciated the feedback on the last one. I can't to share what we've been coming up with. It's very exciting!
xxMKR
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What is the Stock Market?
The stock market is a giant, globally organized marketplace, that moves huge sums of money back and forth every day.
In order to understand the stock market, we need to understand what a stock is.
What is a stock?
A stock, also known as a share, is a financial token that signifies ownership of a company in some proportion. When you own a stock, you own a portion of that company. For example: If Chuck E. Cheese had 1,000 shares and you bought one share, you own 1/1000th of Chuck E. Cheese.
When the value of that company increases, so does your stock price.
Why do companies sell stock?
Stocks allow a company to raise massive amounts of money with basically no extra effort.
The stock market bases the value of a company on it’s potential earnings down the line. This means small companies can earn MILLIONS of dollars if investors think they can succeed in the future. And if a company wants to sell their shares, they need a place to do it: that place is the stock market.
How do companies list shares?
Companies list shares by selling them through an Initial Public Offering, or IPO. This changes a company from a private business to a publicly traded one. Once a company’s stock is listed on an exchange, the public can buy and sell them.
Why do share prices fluctuate?
Here’s an example: You list a table on craigslist for $100, and you get a hundred emails from different people saying they want to buy the table. Now you start thinking “Maybe I priced this table too low”. You re-list the table at higher and higher prices until it reaches the most that the last buyer is willing to pay for it. If you receive no offers, you’ll likely start dropping the price until someone bites.
This is basically how the stock market moves, except it’s not just one person on craigslist adjusting the price of a stock - it’s supply and demand driven by millions of transactions every second.
The stock market is composed of millions of investors and traders that all view their investments differently. Prices fluctuate based on the opinions of these people, and the company's earnings and operations.
If more people buy, the price climbs. If everyone wants out of a company, the price falls due to lack of purchases.
Why bother investing?
Well, if you do it right, you can make a lot of money, but it’s a long game that’s tough to predict. If you bought $1000 of Amazon stock back in 1997, you’d have roughly $1.5 million today. A long time to wait, but an investment like that is worth it to many people!
Basically, as long as you’re earning more than 3% on your money invested in the stock market, you’re doing better than you would just keeping your money in a long-term savings account.
How to invest?
If you want to purchase a part of a company that you think will succeed, the first thing you’ll need is a trading account. You can start one with a common provider like E*Trade, or you can use a free service like Robinhood, which doesn’t charge brokerage fees.
Once you have a trading service account, you have to decide which company’s stock to purchase. You also need a certain amount of money to do this - stocks can range from a few cents to thousands of dollars, and you can’t buy just a piece of a share - it’s all or nothing.
Before you make a purchase, you’ll want to do research to make sure you understand what a company does to make money. See what experts think about a company before you buy it.
For the beginning investor, the best way to get involved is to take a little bit of money you’re okay with losing, do some research, and invest wisely.