A share is one of a finite number of equal portions in the capital of a company, entitling the owner to a proportion of distributed, non-reinvested profits known as dividends and to a portion of the value of the company in case of liquidation.
Equity is a share in the ownership of a company. It represents a claim on the company’s assets and earnings. As you acquire more stock, your ownership stake in the company increases
The terms share, equity and stock mean the same thing and can be used interchangeably.
A stock market is a market for the trading of company stock/ shares, and derivatives. This includes securities listed on a stock exchange as well as those only traded privately.
Market is a place where buyers and sellers of securities can enter into transactions to purchase and sell shares, bonds, debentures etc.
The primary market is that part of the capital markets that deals with the issuance of new securities.
The secondary market is the financial market for trading of securities that have already been issued in an initial private or public offering. In the secondary market, securities are sold by and transferred from one investor or speculator to another.
The term " demat ", in India refers to a dematerialized account for individual Indian citizens to trade in listed stocks or debenture in electronic form rather than paper, as required for investors by the Securities Exchange Board of India (SEBI).
In a demat account, shares and securities are held electronically instead of the investor taking physical possession of certificates.
A demat account is opened by the investor while registering with an investment broker (or sub-broker). The demat account number is quoted for all transactions to enable electronic settlements of trades to take place.
Access to the demat account requires an internet password and a transaction password. Transfers or purchases of securities can then be initiated. Purchases and sales of securities on the demat account are automatically made once transactions are confirmed and completed.
Almost every large corporation started out as a small, mom-and-pop operation and through growth, became financial giants.
Wal-Mart, Dell Computer, and McDonald’s had combined profits of $10.34 billion this year.
Wal-Mart was originally a single-store business in Arkansas.
Some companies actively increase liquidity by trading in their own shares.
Function and purpose
How to track your investments? (Portfolio tracker)
The Portfolio Manager tracks and monitors all your investments, cash flow and assets, through live price updates.
Investments like equity, mutual funds, assets, cash flows, borrowing and more can all be tracked.
Displayed in real time, it is the most up-to-date and precise indicator of your net worth! With the Portfolio Manager, you can not only view your investments at each stage, but can use this record of your holdings to base any future investments decisions.
Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry.
This type of auction is used in stock exchanges and commodity exchanges where traders may enter "verbal" bids and offers simultaneously.
The other type of stock exchange is a virtual kind, composed of a network of computers where trades are made electronically via traders.
Actual trades are based on an auction market model where a potential buyer bids a specific price for a stock and a potential seller asks a specific price for the stock. (Buying or selling at market means you will accept any ask price or bid price for the stock, respectively.)
Dividend Payout Ratio: The percentage of earnings paid to shareholders in dividends. Calculated as: = Yearly dividend per shs. Earning per shs. Or equivalently = Dividend Net income The payout ratio provides an idea of how well earnings support the dividend payments. More mature companies tend to have a higher payout ratio. Dividend Payout Ratio
The use of "bull" and "bear" to describe markets comes from the way in which each animal attacks its opponents. That is, a bull thrusts its horns up into the air, and a bear swipes its paws down.
These actions are metaphors for the movement of a market: if the trend is up, it is considered a bull market. And if the trend is down, it is considered a bear market.
The Bull market is when everything in the economy is great, people are finding jobs, gross domestic product (GDP) is growing, and stocks are rising. Things are just plain rosy! Picking stocks during a bull market is easier because everything is going up. Bull markets cannot last forever though, and sometimes they can lead to dangerous situations if stocks become overvalued. If a person is optimistic and believes that stocks will go up, he or she is called a "bull" and is said to have a "bullish outlook".
Sometimes, the market seems to react irrationally to economic or financial news, even if that news is likely to have no real effect on the fundamental value of securities itself. But, this may be more apparent than real, since often such news has been anticipated, and a counter reaction may occur if the news is better (or worse) than expected.
The stock market may be swayed in either direction by press releases, rumors and mass panic; but generally only briefly, as more experienced investors quickly rally to take advantage of even the slightest change.
Over the short-term, stocks and other securities can be battered or buoyed by any number of fast market-changing events, making the stock market behavior difficult to predict.
Behaviorists argue that investors often behave 'irrationally' when making investment decisions thereby incorrectly pricing securities, which causes market inefficiencies, which, in turn, are opportunities to make money.
A stock market crash is often defined as a sharp dip in share prices of equities listed on the stock exchanges. In parallel with various economic factors, a reason for stock market crashes is also due to panic and investing public's loss of confidence. Often, stock market crashes end speculative economic bubbles.
There have been famous stock market crashes that have ended in the loss of billions of dollars and wealth destruction on a massive scale.
An increasing number of people are involved in the stock market, especially since the social security and retirement plans are being increasingly privatized and linked to stocks and bonds and other elements of the market.
There have been a number of famous stock market crashes like the Wall Street Crash of 1929, the stock market crash of 1973–4, the Black Monday of 1987, the Dot-com bubble of 2000, and the Stock Market Crash of 2008.
One of the most famous stock market crashes started October 24, 1929 on Black Thursday. The crash began in Hong Kong and quickly spread around the world.
In short selling, the trader borrows stock (usually from his brokerage which holds its clients' shares or its own shares on account to lend to short sellers) then sells it on the market, hoping for the price to fall.
The trader eventually buys back the stock, making money if the price fell in the meantime and losing money if it rose.
Exiting a short position by buying back the stock is called "covering a short position.“
Hence most markets either prevent short selling or place restrictions on when and how a short sale can occur. The practice of naked shorting is illegal in most (but not all) stock markets.
One of the many things people always want to know about the stock market is, "How do I make money investing?" There are many different approaches; two basic methods are classified by either fundamental analysis or technical analysis.
Fundamental analysis refers to analyzing companies by their financial statements found in SEC Filings, business trends, general economic conditions, etc.
Technical analysis studies price actions in markets through the use of charts and quantitative techniques to attempt to forecast price trends regardless of the company's financial prospects.
Additionally, many choose to invest via the index method. In this method, one holds a weighted or unweighted portfolio consisting of the entire stock market or some segment of the stock market . The principal aim of this strategy is to maximize diversification, minimize taxes from too frequent trading, and ride the general trend of the stock market.