how do stocks work? is it a one time investment? how do they work!!! please answer if you know the answer.

Its a one-time investment. You pay for them once and after that you don't have to give any more money.

Stocks are essentially a part of a company.
Lets say: A icesalon has 100 stocks. you own 10 of those. You now "own" 10% of that icesalon
This doesn't mean you actually own 10% of the building, it just means you own 10% of "The Icesalon", the immaterial company so to say.
That % also reflects your influence if the company. 10% on itself would not amount to much in a meeting; but if you would have, lets say, 51% of the stocks, you would have a majority. This means you can tell the company what it should do.
You could for example have the entire staff run around with pink partyhats all day. (Because of this most major companies hold 50% of the stock themself. That way they can tell themselfs what to do.)

How does a stock make you money?
Two options: Either by "Dividends" or by selling your stock (This last one makes a lot of cash quickly, but you lose your voice in the company)
Also called : Long term stocks and Short term stocks
Dividends are a % of the profits that a company has made. If these would be payed out in this scenario, you would get 10% of these profits However, the paying out of Dividends has to be decided by upper management (and by extend the majority of the stockholders)
If a company won't pay Dividends to its stockholders that year, it could also decide to reinvest it in the company. This ofcourse has to have a good and justifiable reason. For example: The company is doing great; If they get more money, they can grow immensely next financial year.
This is not a bad thing for you as a Stockholder, this might mean you don't get any money this year from Dividends, but your stock becomes more valuable and next year they will reap even bigger profits meaning you would get 10% of an even larger amount of cash
Ofcourse, if a company is doing badly. It has little reason to justify reinvesting and as such would have to pay Dividends to keep Stockholders around.

But what if the company is losing money this year, would I then have to pay the company money?
No. You don't have to pay them money. It just means they won't pay you either. Also, your stock becomes worth less (notice the space there)

How can you still lose money from stocks?
Two options: You sell the stock lower then when you bought it or the company goes bankrupt.
In the first case: Lets say you bought each stock for $10, meaning you payed $100 in total for those 10 stocks.
The stocks are now worth $9 and you sell them all. You now got $90 back. You just lost the game
In the second case: the company goes backrupt, your stock becomes almost worthless (notice the lack of space there)
Meaning that if they pay Dividends you would get... 10 x 10% of $0 = $0
In this case it would have been better to actually have sold them for a lower price.

I hope that clarifies things

Problem here is, that stocks are very virtual nowadays and no longer solely based on real money flow, like material cost or salaries and the actual "worth" of a company is decided by many influences. Therefore it's pretty difficult to spot the risks.


For everyone, that is really interested in economics and stocks, may it be for sole interest or to decide about possible risks, I highly recommend: http://www.zerohedge.com/ also very good RSS-Feed.

I've an interest in purchasing stock in the company I work for currently. I may have to wait until I make a little more income, but they are a very fast growing business that carries no debt, and I feel like it would be a good investment. I have much more to learn about investments, though, and I am not even sure how to go about doing such a thing. I wonder if all employees get a % discount on purchasing?

Very informative post. How do you know know all that, have you dabbled in the stock market before?

I like the idea of investing in stocks, you know how you could buy a certain amount of shares in a company and in ten years time they'd be worth *insert ridiculous sum of money*. I always seem to be attracted to things which appear to be ways to get rich quick, but in reality I know very little about the stock market, and what I do know tells me that investing your own money in the stock market and effectively taking on the big companies which make millions/billions of pounds a year through trading, is a bad idea.

Double post, sorry.

Glad that you like it

Well, I have done some trading myself for about 10 months?
Made me somewhere around $43 when I sold them again.
Besides that I am the kind of person who reads a lot of books about anything

Yeah, its a nice idea that you could buy a bunch of stocks, forget about them for 10 years and then comeback after that time and reap loads of cash.
But it sounds dangerous to me. So you will have to keep an eye on it on a daily/weekly basis or so. Besides that, that would still not be making a lot of money quickly, it would just having a heap of cash that accrues over time.
Only exception to that would be buy a pile of stocks from a small company that just enters the market and after a month or so they declare that they found a way to make cars run on water.

As for the quick money, the short term stuff... I have little experience in that, tried it once, lost money on it
Its pretty much the buying when the stocks are low and selling when they are high, usually this is a difference of a few cents on each stock.
And the big players have HUGE computers that do that for them, making millions of huge transactions per minute based on minor hints making about a cent or two with each stock they sell.
In other words: they lose millions and regain them in the time that you have read the previous sentence.
Nothing for me, you need nerves of steel and a lot of time working on it. I'd rather play it safe and relatively slow.

As for that last part, if you want to play it safe; Invest in multiple stocks. That way you will have less chance for big earnings, but also less risk to lose money due to having bet on one horse.

How much did you invest? (wondering if $43 was a good profit, but sounds alright considering the timescale)

a bit above 275, was during the time that I actually had money
Also, was only around $33 after reviewing it, bringing it to around a profit of 11%, which was above average

Another good word for stocks is gambling. I understand the basic concepts behind trading. I have always been interested in maybe trying out trading. However, given the obnoxious way we view a company's success and what causes a stock to rise or fall.... I am skeptical. Maybe I will save up some money and do some small amount of trading in the future, but only when I have like $400 to blown.

I should have invested in my company when I started. I. Would have doubled my investment by now.

so if someone bought some apple stocks back in the 90s they would be rich by now?

Especially if they did that during August 1984, the stocks were $1.80 or so back then.
+- $400 right now.

Yeah, they would have been rich.
(And then to think the 3rd founder apparently sold his 10% of the shares for $800) (that would be billions now)

Actually, it seems they are fluctuating a lot in price. Going up $150 in a year

In the case of Apple probably. This is a problem with investing. Returns may take a while to appear. Often times people demand immediate returns. Back to my gambling idea. You cannot know if a company will sink or swim.

they would be rich if they sold the stocks for four hundred dollars each and had thousands of them - but what's the point of selling stocks that will only increase in value though? having stocks that are worth a lot don't mean shit if you need to spend the money, it just means you're paper rich. investing works the other way far more often that it does in the apple example think of Starbucks. in the 90's that seemed like a sure thing that would only ever increase and today it's plummeted. the chances of that company ever getting that big again are extremely slim. if you buy those stocks you'll have to sell them at a loss eventually.
and Reiji is right, it is just gambling. getting into investments thinking that you're going to get rich quick is just as foolish as going into a casino thinking that lady luck's got your back tonight. the reason why some investors made millions is because they had millions to loose in the first place.

don't forget those who made billions by exploiting people's ignorance. We cannot forget that the market is effected by what people say about it more than anything. We tend to forget that the stock market is an invention of man, and can be manipulated accordingly.

I agree, that a lot of manipulation is going around, as to be seen in the gold price that mostly recently nearly climbed up to 1800 USD/Oz, while silver is still stagnating. Nevertheless, for everyone interested in theory, here's a neat little collection of data:

http://squareofnine.blogspot.com/

Even though this is an old thread, I want to warn people against losing money. Don't invest in the stock market. Investing in the stock market is like a random, untrained, 100 hundred pound kid fighting any of the Klitschko brothers(for anyone who doesn't follow boxing they are Heavyweight champs who are over 2 m tall and weigh 250+ lb.). The US government and other governments allow CIA, M15, NSA and other government agents to moonlight for private industry. Guess who hires most of them? Wall-street. They also have lots of ex-CIA, ex-NSA, and ex-whatever who still have likely contact with co-workers. Guess who owns most stocks? The richest 10% of Americans own 90% of stocks. Guess who can buy inside info with their better better resources? Them not you. Another thing Wallstreet does is hire the best mathematicians and programmers that the United States produces to create further advantage. They also buy politicians to create the rules. The playing field is not level so don't play this unfair game. As someone else said it is gambling for you, for them it is profit because they can avoid taxes and buy research, tips, inside info, even the best espionage agents the most powerful governments have.

Source:
The Gary Null Show Podcast - 03/15/10 3PM

The money Myou was describing, $33 was peanuts for his investment. To give perspective I went to a local discount retailer TJ Maxx, bought a bookbag for $50 and resold it on a 10 day auction for $100+shipping on ebay. After that auction I bought another of those bookbags and flipped it for $110 plus shipping. Risk was almost zero, I kept the receipt and tags so I could have returned it. I am new to ebay, but the most I think I could have paid was like $2 for a listing fee if it didn't sell, but I think they charge much less if you don't sell.

So what do you want to lose, at most a few bucks for listing on ebay or possibly most your principal gambling on the stock market? If you know a store's return policy you know whatever you try to flip on ebay cannot ever eat most your principal.