Investing In Stock Market

   One of the most preferred ways of generating money is investing in the stock market. It may be something you have heard from the internet, your own family or that green and red chart on the tv that you didn't understand when you were a kid. But what are stocks and how do they work? How do you make money off them? How do you choose the stocks to buy?

   

*What is the Stock Market

Well first off all the stock market is a market where big companies all around the world sell their products virtually to people to use the money they earn to develop and grow as a company. For example, you have a t-shirt marketing company where you own 10 t-shirts. You need more money to advertise your product in the city nearby that you don't have. When you and your company join the stock market people virtually buy your product which is currently 1 dollar per stock which in this example is a t-shirt. You can use that money to advertise and sell your products and to buy more t-shirts. And the more your company and your stocks grow the more your stocks are worth in the market. And also the people that bought (invested) your stocks can return those stocks and claim the new price of your stock profiting. Of course, the growth in the price of your stocks doesn't just lean on the growth of your company. It has many other factors that we are going to talk about in this article.

   First of all, the most important thing in the price of a stock is chained to its production. What I mean by that is the price of the stock can dramatically change if the producing factories might get harmed. For example today in 2020 because of the break of coronavirus the stock market had a big crush on the prices. And that is because most of the big companies having a production chain in China. Because the fabrics not being able to produce more iPhones Apple is now worth less in the stock market than before. What I mean by that is your first goal has to make background research about the company you want to invest in and look at the places and news for the products they are currently working on. If there is a high probability of the producer getting harmed than it is not a good idea to invest in those companies.

   Then there are other important factors to understand to either invest or not invest in a company. Basically, if you think the company's stock in the market is underpriced than you should have less risk of losing money investing in that company. But if it is overpriced than it is expectable that the stocks in the company are going to fall. It is not always that simple and requires basic knowledge of some things below:

* P/E ratio:

   Is "Price Earnings Ratio". It is used to mainly find the value of the stock against the price of the stock in the market. It can be calculated by dividing the company's current stock price by its earnings per share. If you don't know the earnings per share than you basically need to subtract a company's preferred dividends paid from its net income, and then dividing the result by the number of shares outstanding. I know it sounds complicated for you but you should in most cases be able to find the earnings per share easily.

   A high P/E ratio is 40 and a low one is 7 and 14 is accepted as average in our modern-day. 

*The Intelligent Investigator

   The Intelligent Investigator is a book written by Benjamin Graham and has been a helper to many of our current day billionaires and multi-millionaires. It is a rough book but could make a person really informed about the stock market and could teach the readers a really important base and special tactics for investing. A pdf of the book can be found in ("http://dl.fxf1.com/files/books/english/The%20Intelligent%20Investor%20-$%20BENJAMIN%20GRAHAM.pdf")

   That was the basics for stock market and how you should invest in it. If there are any questions you can contact me at (KKIstan18@gmail.com). I hope this was helpful!