Stock Basics: Conclusion and Resources
Let's recap what we've learned in this tutorial:

  • Stock means ownership. As an owner, you have a claim on the assets and earnings of a company as well as voting rights with your shares.
  • Stock is equity, bonds are debt. Bondholders are guaranteed a return on their investment and have a higher claim than shareholders. This is generally why stocks are considered riskier investments and require a higher rate of return.
  • You can lose all of your investment with stocks. The flip-side of this is you can make a lot of money if you invest in the right company.
  • The two main types of stock are common and preferred. It is also possible for a company to create different classes of stock.
  • Stock markets are places where buyers and sellers of stock meet to trade. The NYSE and the Nasdaq are the most important exchanges in the United States.
  • Stock prices change according to supply and demand. There are many factors influencing prices, the most important being earnings.
  • There is no consensus as to why stock prices move the way they do.
  • To buy stocks you can either use a brokerage or a dividend reinvestment plan (DRIP).
  • Stock tables/quotes actually aren't that hard to read once you know what everything stands for!
  • Bulls make money, Bears make money, but Pigs get slaughtered!

When! Seems like we covered a lot. We hope that this tutorial has given you a good idea of what stocks are and how the stock market works.

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We must emphasize that this tutorial is meant to provide a basic foundation for understanding. There is plenty more to learn in the days, weeks, and years ahead. Check out the links below for more tutorials that build on your newfound knowledge.

Quiz Yourself
Finally, if you think you know this stuff now we challenge.


Related Tutorials
We hinted a few times in this tutorial that there are many strategies for finding a good stock.

There are also other ways to trade stocks that we didn't cover because we've got entire tutorials devoted to the subjects. 
You might have also already heard of mutual funds. These are basically big baskets of stocks managed by a professional. Mutuals can be a great way for beginners to get involved in the market.
Picking stocks can be a daunting task. Fear not! There is also a way to invest in the entire market by using something called a stock index.
 
We mentioned that you need a broker to trade stocks.