What is a Stock???  A Stock represents a share in the ownership of a company.  By purchasing a stock you become a shareholder/part owner of that company.

For Example:  If Bubba’s Button Co. had 100 shares of stock available and I purchased 1 share, I would own 1% of the company.

How does the stock market work?  People buy and sell stocks (or shares of companies) in an attempt to make a profit.  Stock prices constantly rise and fall and you need to know when the best time to buy and sell is.

How do you make $$$$?  1.) You own Stock and the price of that stock increases. You can sell it and make a profit.  2.) The company you own stock in gives dividends (or bonuses) to their shareholders.

Bubba’s Button Co. I purchase 1 stock in Bubba’s Button Co. for $100. Bubba’s Button Co. becomes very popular. The price of 1 stock in Bubba’s Button Co. rises to $200. I sell my stock and make $100 profit.

Buying on Margins  You can buy a stock for a small percentage of the full price by getting a loan from a broker.  I could buy 1 stock of Bubba’s Button Co. for 10% of the price or $10.

Example I purchase 1 stock in Bubba’s Button Co. for 10% or $10. The price of 1 stock increases to $200. You owe your broker $90 for the rest of the stock. Bubba’s Button Co. becomes very popular. You sell your 1 stock and pay back $90 to your broker. You make $90 of Profit.

VS. a period of rising stock prices. People buy stocks confidently because they will make money. a period of falling stock prices. People try to sell their stocks so they do not lose money.

Stock Market in the 1920’s  Extended Bull Market (buying with confidence).  Investors buying on Margins  People wanted to make quick money and did not research companies they invested in