A low or falling stock price will make it difficult for the company to attract top talent. In this way, stocks don't just reflect a company's current prospects, but also play a role in determining a company's future prospects. A company with a high or rising stock price can use that stock to buy out competitors and pay for top talent. That's what Facebook did with WhatsApp and Instagram.

Important Of Stocks For Companies

<ul><li>A stock is a share of ownership in a company.</li></ul>Ex: When I buy 100 shares of McDonald's, I become a partial owner of the company. I become a "shareholder."<ul><li>Stocks move based on the laws of supply and demand. If a lot of people want to buy a stock, the share price will move up. Then if a very large investor comes in and starts to dump his stock, the price of the stock will move down. </li></ul>

What Is A Stock? 

<ul><li>Ronald Read, a janitor lived a simple life and funneled much of his earnings into dividend stocks. When he died at the age of 92, he left behind an $ 8 million fortune, all in dividend stocks. </li><li>You don't need to have a high salary to become a millionaire. You just need to spend less than you earn, and invest the rest in dividend stocks. </li><li>Owning a basket of dividend stocks over a long period of time is one of the best ways to build wealth. </li></ul>

A Janitor - $ 8 Million 

<ol><li>Don’t buy stocks that are hitting 52- week lows.(There is no such thing as a “safe stock.”)</li><li>Don’t trade penny stocks.(A stock that trades under $ 5.) </li><li>Don’t short stocks.</li><li>Don’t trade on margin.</li><li>Don’t trade other people’s ideas. </li></ol>

Five Huge Mistakes That Beginners Make 

"The single most important decision in evaluating a business is pricing power. If you've got the power to raise prices without losing business to a competitor, you've got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you've got a terrible business."

"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."

<ul><li>As an individual, you cannot trade directly on a stock exchange. For that you will need a "broker" or "brokerage account." A broker is simply a middleman who gives people access to a stock exchange. </li><li>Every stock has a bid price and an offer (or "ask") price.</li><li>The bid is the price at which someone is willing to buy the stock.</li><li>The offer is the price at which someone is willing to sell the stock. </li><li>Memorize this phrase right now: “You sell to the bid, and you buy from the ask.”</li></ul>

Bid and Offer Price

<ul><li>Some people like to buy stocks and hold them for many years. We call them "investors."</li><li>Other people like to buy and sell stocks more quickly, maybe holding them for only an hour, a day, a week, or a month. We call these people "traders." </li></ul>


Investors Vs Traders

<ul><li>Just copy him. <a href="https://www.berkshirehathaway.com/letters/letters.html">Go here</a> and download his letter for the most recent year. Scroll down and you will see a list of every stock that Buffett owns.</li><li>An even easier route might be to just buy some B- shares of Berkshire Hathaway (BRK- B). You can then sit back and relax and let Warren Buffett, Charlie Munger, and their successors do all of the hard work. </li></ul>

How to Pick Stocks like Warren Buffett 

<ul><li>An index is simply a collection (or "basket") of stocks. Let's say that we take the 500 U.S. stocks with the largest market caps and toss them into a big basket. That basket is called the <a href="https://www.slickcharts.com/sp500">S& P 500. </a></li><li>There's the Dow Jones Industrial Average (DJIA). This is a famous index that goes back to 1896. It always contains<a href="https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average#Components"> only 30 companies. </a></li><li>Another well- known index is the <a href="https://en.wikipedia.org/wiki/Nasdaq-100#Components">Nasdaq 100</a>, which contains mostly tech companies. </li></ul>

Index

Stocks are usually bought and sold on what are called "stock exchanges." A stock exchange is simply a place where buyers and sellers show up and exchange their shares for money, or their money for shares. <ul><li>The NYSE is best known for its blue chip (high- quality) stocks like Coca- Cola and McDonald's.(KO (Coca- Cola) or HD (Home Depot))</li><li>The Nasdaq is best known for its tech stocks like Netflix and Apple.(AAPL (Apple) or NFLX (Netflix))</li></ul>

How to Get Started with Stocks? 

<ul><li>Never buy a stock just because it is "cheap" or has a low P/ E. (Price-Earning Ratio)</li><li>The key to making a lot of money is not losing a lot of money in the process. </li><li>Keep your losses small and manageable, especially while you are still in the learning phase. It’s OK to buy just 1 share of stock when you are testing out a new strategy </li></ul>

Keep Your Losses Manageable

<ul><li>A dividend stock will usually make a cash payment into your brokerage account every 3 months. That cash payment is called a dividend. </li><li>Investing in dividend stocks is one of the best ways to build wealth. The reason it works so well is that you can take the cash from a dividend payment and use it to buy more dividend stocks. Then those dividend stocks will pay you more dividends. </li></ul>

Creating Passive Income with Dividend Stocks 

<ul><li>If you are looking for a good long- term investment, buy a company that has the highest sales in its industry.</li><li>Once a business sells more than any other company in its industry, it becomes very difficult to compete with.</li><li>There's no substitute for being #1 in your industry.</li></ul>Examples:<ul><li>Home improvement- Home Depot;</li><li>Fast food- McDonald's;</li><li>Toothpaste- Colgate Palmolive;</li><li>Payments- Visa;</li><li>Smart phones- Apple; </li><li>Social media- Facebook. </li></ul>

Insider Secrets of the Stock Market 

<ul><li>75% of new traders quit within the first 3 months.</li><li>90% of new traders quit within the first 6 months.</li><li>If you can stick around long enough and keep learning, you will be successful at this game.</li><li>Never forget that. Anyone can learn to play this game. </li><li>Buy the strongest stocks that keep moving up. Add to your winners, get rid of your losers, and don't get too greedy. </li></ul>

The World’s Greatest Opportunity Machine 

Learn to make money in the stock market, even if you've never traded before.The stock market is the greatest opportunity machine ever created.Are you ready to get your piece of it?This book will teach you everything that you need to know to start making money in the stock market today.Don't gamble with your hard-earned money.If you are going to make a lot of money, you need to know how the stock market really works.You need to avoid the pitfalls and costly mistakes that beginners make.And you need time-tested trading and investing strategies that actually work.This book gives you everything that you will need.It's a simple road map that anyone can follow.In this book, you will learn: How to grow your money the smart and easy way The best place to open up a brokerage account How to buy your first stock How to generate passive income in the stock market How to spot a stock that is about to explode higher How to trade momentum stocks Insider tricks used by professional traders The one thing you should never do when buying value stocks (don't start investing until you read this) How to pick stocks like Warren Buffett How to create a secure financial future for you and your family And much, much more Even if you know nothing about the stock market, this book will get you started investing and trading the right way.Join the thousands of smart traders and investors who have profited from this ultimate guide to the stock market.Amazon best-selling author and retired hedge fund manager, Matthew Kratter will teach you the secrets that he has used to trade and invest profitably for the last 20 years.Even if you are a complete beginner, this book will have you trading stocks in no time.Are you ready to get started creating real wealth in the stock market?Then scroll up and click BUY NOW to get started today.

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Learn to make money in the stock market, even if you've never traded before.The stock market is the greatest opportunity machine ever created.Are you ready to get your piece of it?This book will teach you everything that you need to know to start making money in the stock market today.Don't gamble with your hard-earned money.If you are going to make a lot of money, you need to know how the stock market really works.You need to avoid the pitfalls and costly mistakes that beginners make.And you need time-tested trading and investing strategies that actually work.This book gives you everything that you will need.It's a simple road map that anyone can follow.In this book, you will learn: <ul> <li>How to grow your money the smart and easy way</li> <li>The best place to open up a brokerage account</li> <li>How to buy your first stock</li> <li>How to generate passive income in the stock market</li> <li>How to spot a stock that is about to explode higher</li> <li>How to trade momentum stocks</li> <li>Insider tricks used by professional traders</li> <li>The one thing you should never do when buying value stocks (don't start investing until you read this)</li> <li>How to pick stocks like Warren Buffett</li> <li>How to create a secure financial future for you and your family</li> <li>And much, much more</li> </ul> Even if you know nothing about the stock market, this book will get you started investing and trading the right way.Join the thousands of smart traders and investors who have profited from this ultimate guide to the stock market.Amazon best-selling author and retired hedge fund manager, Matthew Kratter will teach you the secrets that he has used to trade and invest profitably for the last 20 years.Even if you are a complete beginner, this book will have you trading stocks in no time.Are you ready to get started creating real wealth in the stock market?Then scroll up and click BUY NOW to get started today.

Matthew R. Kratter is an accomplished writer whose work has resonated with readers around the world. Matthew R. Kratter has published several books that explore a range of topics, from fiction to nonfiction, and has received critical acclaim for the ability to weave compelling narratives. Matthew R. Kratter's writing style is known for its depth and authenticity, and has earned quite a loyal following of readers.

Index

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Trading ETFs (exchange-traded fund")

What Are the Three Major Stock Indexes?

1. Pick an index