“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case” – Robert G Allen.
Everyone knows Amazon; they are an online retailer.
The stock market is an online retailer.
Let me explain.
Financial centres like London and New York have their own stock exchanges – their own retail outlets. Places where investors such as private individuals or banks or pension and hedge funds can buy and sell shares.
One share is a part ownership of a business.
The buying and selling of shares can be done over the phone to a stockbroker. A stockbroker is a retail sales assistant in stocks and shares.
You can buy or sell shares in companies from the US, UK, Europe, India, Japan and many more countries on a modern stockbroker’s website.
The Stock Market – The Traditional View
When people refer to the stock market, they usually mean the stock exchange (retail outlet) in their own country. For example my stock market is the London Stock Exchange.
Through my stockbroker’s website I have access to exchanges worldwide and buy and sell shares on the London Stock Exchange as well as The New York Stock Exchange, The NASDAQ and The American Stock Exchange.
Like Amazon, a stock market is a place where buying and selling takes place but the only goods on offer are shares.
So you see, the stock market and stock exchanges in particular are retail outlets for the buying and selling of shares.
How You Can Profit From The Stock Market
Traditionally, people profit from the stock market via membership of a pension scheme either privately or through a company you work for. In the US this is traditionally achieved through the 401(k).
Sometimes, people will put money into mutual funds to profit from the stock market and let someone else do the job of picking stocks. The results of stock picking by mutual fund managers have been less than satisfactory.
This is not just a US phenomenon.
The UK pension industry has been heavily criticised for making money, not from the stock market, but from the fees they charge their customers.
The Shares and Stock Markets Blog is different; it’s about empowering you. To take control of your own financial well being.
No spam, no bullsh*t and definitely no promises of working 5 minutes a day for instant riches like some websites like to offer.
The only way to profit from the stock market is to take ownership and control of your participation in it. Leaving it to others will see an erosion of the wealth you have worked so hard to build.
Start Taking Control Of Your Own Wealth Creation
In my opinion, the best way to empower yourself to understand what the stock market is and how you can profit from it is to get a copy of The Intelligent Investor by Ben Graham.
This book is widely recognised as the best book ever written about stock market investing.
Warren Buffett seems to think so.
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What Is The Stock Market? The Real Answer.
The Stock Market gives you the opportunity to profit from the folly of other stock market participants. What it means is that stock market is simply the participants in it such as individuals and institutions like pension funds, hedge funds, mutual funds and banks who buy and sell shares.
The stock market is not the millions of share price numbers that flash across the screens of day traders.
The folly of others is simply the stock markets’ uncanny ability to inflate and deflate the values of companies – they overvalue and undervalue them.
You can profit from their folly by:
- buying shares in companies when they are undervalued and;
- sell them when they reach their full value and stay away from the stock market when if they are overvalued.
This is is different from the gamblers mentality of trying to buy in bear markets and trying to sell in bull markets.
To really know what you’re doing take a look at the start here page, an excellent resource for stock market beginners.
I hope this post was helpful to you. If it was, please leave a comment below and ask any questions if you wish!
Thank you for your interest in the stock market and The Shares and Stock Markets Blog and good luck with your investments.
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