When you purchase stock in a company that you share in the earnings and losses of this company till you sell your stock or the company goes out of business. Various studies have shown that long term stock sentiment ownership has been among the best investment plans for many people.
Folks buy stocks on a suggestion from a friend, a phone call from a broker, or a recommendation by a TV analyst. They purchase during a strong market. When the industry later starts to decline they panic and sell for a reduction. This is the normal horror tale we hear from those who don’t have any investment strategy.
Before committing your hard earned cash to the stock exchange it will behoove you to consider the risks and advantages of doing this. You must have an investment strategy. This strategy will specify exactly what and when to purchase and when you will sell it.
History of this Stock Market
More than two hundred years ago private banks started to sell stock to raise money to expand. This is a brand new way to invest and a way for the rich to get richer. In 1792 twenty four large retailers agreed to make a marketplace called the New York Stock Exchange (NYSE). They agreed to meet daily on Wall Street and purchase and sell shares.
By the mid-1800s that the United States was undergoing rapid expansion. Businesses began to sell stock to raise cash for the expansion necessary to meet the expanding demand for their services and products. The people who purchased this stock became part owners of the business and shared in the profits or loss of the company.
A new sort of investing started to emerge when investors realized that they might sell their inventory to others. This is where speculation began to affect an investor’s decision to buy or sell and led the way to large fluctuations in stock rates.