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Transcript
Hi there, in this video, we’ll talk about how to own stocks. So, kick back, get comfy and let’s get started.
So what is a stock?
Stocks, or “shares” represent ownership in a company.
Partial ownership. Like a percent of a percent of a percent.
Each share has the same dollar value.
That value changes according to the company’s market cap, which is basically how much the company’s worth.
There are many reasons to buy a stock. Three common ones are:
Long-term investment: You buy the stock because you believe it will grow in value in the long-term.
For some stocks you’re invested in, you will receive dividends
Dividends are profits the company distributes to its shareholders, usually on a quarterly basis.
Dividends are normally just a few cents per share, but for investors with a large stake, these can amount to hefty payouts.
Reason two is short-term trading: You think the stock’s price will change soon, and you’d like to cash in on that volatility.
The third reason is ownership: You believe in the company and want to be one of its owners.
Often, shareholders get to cast their votes on important decisions, so you can actually take part in steering the ship.
There are many ways to find an investment that’s right for you.
You can invest in a company you like, an industry you believe in, a market you know or an exchange you follow.
The opportunities are endless and deserve their own video. Let’s do that!
Stay tuned.
Now let’s take a quick look at the kind of things investors watch out for when investing in stocks.
These can be broken down roughly into two categories: Fundamental analysis and technical analysis.
“Fundamental” basically means information and real-world events that can impact a share’s price.
It’s an oversimplification, but I’ll allow it.
For example, an earnings report, which companies publish on a quarterly basis, can provide information about a company’s performance, which can impact its value and, therefore, its stock price.
Other fundamentals can include government regulations, central banks’ rate decisions, geopolitical events and more.
Let’s move on: Technical factors!
As the name suggests, these are, well, technical.
Ever see those scary charts and graphs go up and down? Well, for the technical analyst, these charts are a never-ending fountain of knowledge.
The technical analyst tries to predict where a stock is headed next by studying these charts and searching for patterns.
Of course, there is much more to know about stocks. This is just a percent of a percent of the knowledge out there.
If you’d like to know more, head over to the eToro Academy and discover how you can become a more knowledgeable investor.
Until next time!