The Stock Market

Stocks allow people to own a portion of a firm. E.g. if you’d buy 50 stock of Amigo Company and they would have a total of 1,000 stocks, you would own 5% of the company.

Companies can raise their funds by raising the amount of stocks they have. The investors who buy these stocks are entitled to their share of the company’s earnings.

There are stock investors and stock speculators. Stock investors buy stocks in order to get a share of the company, hoping for it to be profitable. Stock speculators only buy stocks for a short period of time, looking for quick profit.

Stock speculators are viewed badly by people, when in case they are helping the market stay stable by fixing the “mispriced” stocks. (If it is under-priced, they buy low and sell high making the stock price go higher, if overpriced, they sell high and buy low, making the stock price go lower)

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