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Stock Market Investing 101 | Minority Mindset – Jaspreet Singh
What’s up everybody my name is Jaspreet Singh & welcome to the Minority Mindset. You’ve heard it on the news, you’ve heard me talk about it but what is stock market investing?
Starting from the basics, investing is something that creates passive income, meaning you do it once and then continue to get paid for it again and again. That’s why I don’t consider day trading stocks investing. Day trading requires daily work, daily time, and daily effort. That’s not investing.
Investing in stocks means you research a company you want to invest in, you buy shares of it, and hold for the long term while possibly receiving quarterly cash payments called dividends just for holding the stock.
So let’s get into it. When you buy stocks, you are buying shares of a company. What that means is, when you buy shares of the McDonalds stock, you become an owner of McDonalds.
You can easily buy and sell public companies using an online stock brokerage. A public company is one you can trade meaning buy and sell in an open stock market like the NYSE. Some public companies you’ve probably heard of are McDonalds, Macys, Amazon, and Facebook.
This is different than a private company, which isn’t traded on a public stock market. Usually private companies tend to be smaller, but there are large private companies like Dell. A private company goes public when they file an IPO, an Initial Public Offering.
The stock market is valued based on supply and demand. When people are optimistic in the economy, people decide to buy stocks, when there are lots of buyers, the prices of stocks will go up.
When the prices of stock go up, the media will start reporting things like,
omg the stock market is doing amazing, now is the time to buy get in now, people are making a killing.
Then a bunch of people follow the hype because everyone wants to get rich quick, and then this makes the stock market prices go even higher.
Then this continues to happen until people look at the stock market prices and see that companies are valued way higher than they are worth. What happens then? Well everyone who owns stock wants to sell them, and people don’t want to buy an overvalued stock, so this brings the stock price down because there are more sellers then buyers. Then the media comes back and says
the world is going to end sell your stocks,
and the stock market goes down.
So what do you do? Remember you should always do your own research I’m not your financial planner, but from my experiences find a strong company that is innovating for the future that people like. Then, wait. wait until the market crashes or I wait until there is a correction in the market and the price of strong companies is undervalued and below what I should be, then buy. Simple as that, then hold the stock and ride the market up.
Now I know this is an oversimplified version of how it works, but that is the essence of it.
One last thing I want to talk about is how you get paid. If you buy 100 stocks at $25 a share, you pay $2500 to buy the stocks and then if you sell it for $50 a share, you will get $5000 leaving you with a $2500 profit. If you sell it for $20/share you just lost $500. And, many stocks offer dividends which means that the company will pay you cash every few months or year just for investing in the company.
You can also make money when a company goes under by shorting stocks, essentially you bet against the success of a company, but I’ll save this for a later video.
This Video: https://youtu.be/DTXJ57zV3yk
Based in Detroit. #Punjab