Beginners Guide to the Stock Market 

Topics 
1. What is the Stock Market? 
 
2. How does it work? 
 
3. How to get started? 
 
4. How to stand out? 
 
What is the Stock Market? 
The ​Stock Market​ is a market where p ​ ublic companies​ (Companies 
that you can buy stock from) offer shares that can be bought, sold, or 
held. There are two main groups that get involved with stocks. ​Stock 
brokers and firms​ buy, sell, and hold stock for you. They take your money 
and invest it into the market. The broker and firm make money by taking 
commission​, which is basically just their cut. There's also investors like 
you and me. Nonetheless if you own stock you're known as a ​Shareholder​. 
Shareholders​ ​face r​ isk e
​ veryday! For example, you could buy stock in a 
bull market​ (profitable ​returns​), and suddenly the market can c ​ rash​, and 
you'll be placed into a ​bear market​ (unprofitable r​ eturns​). The point is, NO 
ONE knows what the market will look like. Investors can try and predict 
the market, kind of like a weatherman. They do this by following t​ rends 
(or direction of the market or a stocks price). One way investors do this is 
by following and analyzing a ​Market Index​, let's say the S&P 500. 
Following an index will show how the market is performing.  
 
How Does it Work? 
The vast world of the stock market can be confusing, challenging, 
and even dangerous...Especially for a beginner. T ​ o simplify things, we can 
look at the ​stock market​ like a farm. You, the​ farmer, take a few seeds 
you inherited or have laying around, and plant them in a field. You fertilize 
them, water them, and even shelter them. The seeds grow into plants and 
produce fruit. You then collect the fruit and sell it for a profit. Now let's 
look at this scenario but instead of a farm, we're on Wall Street ready to 
start our new job as a ​stock broker​! You, the stock broker, take money 
that a client at your ​firm​ has trusted you with and invest it into the 
market. You trade, analyze and follow t​ rends​. The stock reaches a price 
you're comfortable with. You cash out and distribute the money to your 
client, and you the broker make money via ​commission​. If you're like me, 
you're not a stock broker, and you don't work on wall street. Well, not yet 
at least. The basic concepts of the stock market are the same for 
everyone. What differentiates me and Warren Buffet, is how big time 
traders go about it!  
 
How to Get Started! 
After developing a basic understanding of what the stock market is 
and how it works, we can now move on to how you would get started! 
The goal of all ​shareholders​ is to buy s
​ tock​ in hopes of making a proftbale 
return​. To do this, you need to buy the right stock. A lot goes into buying 
the right stock, including following stock ​trends​, watching the market 
through a ​market index (S&P 500)​, and even following a company's moves 
and decisions via their website, instagram, youtube, etc. Once you've 
researched and found a company you think will make you money, you 
need to find a place to do the actual trading and investing. There's three 
main ways to do this. You can do it yourself using a trading app on your 
mobile device or computer, you can visit a ​firm​ and work with s ​ tock 
brokers​. (Who will do the work for you). Or you can visit our investment 
page, and begin your journey with us! Let's say you chose to do the 
investing all on your own. Ok, now you've researched and found the stock 
you want to buy, set up an account with a trading app, all that's left is to 
buy stock and be patient. Remember you can buy a certain number of 
shares too. Doing this will increase the amount you spend, but if the stock 
ends up rising you will make more money! Let's say you bought 3 shares 
of stock worth 10 dollars=30$ spent. Let's say the stock price per share 
goes from 10$ to 15$ in a matter of 2 weeks. You went from 30$ to 45$, 15$ 
profit! Now depending on the app you're using they will either take a 
small commission fee, or none at all. Nonetheless it was your first time 
trading, and this is your first step to achieving greatness!  
 
How to Stand Out? 
Now we can add on to the basic concept of the stock market and 
trading, in hopes of becoming more successful. Once you've invested in a 
stock and start to get a feel for things, you should start building up a 
portfolio w
​ hich is basically just a list of stocks. Building a portfolio is all 
about ​diversification​. Lets say your portfolio is a vending machine. You 
the vendor stock up on 4 kinds of sodas. You turn on the news and see 
that one of the brands of sodas you bought is made of dog piss, meaning 
no one will buy it-Making it a waste of money. Since you're a smart 
vendor you made sure to incorporate​ diversification w ​ ith your vending 
machine, allowing you to still be successful even though one of your 
sodas will not make you money. Earlier we mentioned following t​ rends​, 
watching the market through a ​market index​, and following a company's 
moves and decisions is what you need to do while picking a stock. As you 
grow as an investor there's ​more y ​ ou can do in terms of picking and 
buying the right stock. Following the company's ​Market Cap ​is important. 
A company's market cap is determined by multiplying the current price 
per share, by the number of shares. (Bigger companies have bigger 
market caps). Another thing to look out for is a company's ​Dividend​, 
which is basically just a piece of a company's earnings that is distributed 
to shareholders. More key things to look for while buying stock include: 
● PE Ratio​-Price divided by earnings per share. Lower PE 
Ratio=Higher profits. 
● Yield​-Ratio between stock price paid and the dividend 
paid-For example, if a stock is 100$ per share, and has a 
dividend of 5$. The yield would be 5%, divided 5 by 100 (Turn 
to percent). 
● Beta​-Measure of risk on a stock or portfolio.  
● Volume​-The number of shares that are traded on a particular 
day. 
 
Like we mentioned earlier no one can predict the market...But, 
using and knowing these vocab words will help you in buying the right 
stock, and hopefully make you money!