Stock trading carries a fascinating allure for those unfamiliar with the markets. We hear the stories of people making fortunes in stocks, but few of us actually know how it works. Although learning about stocks is not necessarily complicated, it can be daunting for beginners to face new terminology, numerous choices, and the potential for losing money.
However, with the right guidance, strategic investments, and patience, making financial gains in the stock market can be feasible. 1879 Advisors is here to provide you with more information on stocks, and when you’re ready, we can use our expertly devised strategies to secure long-term earnings from your investments.
All the Basics
What are Stocks?
Stocks are simply a share of ownership in a specific company. They represent a claim to a portion of the company itself and its earnings and assets. When you buy a share of a company’s stock, you become a shareholder, which translates to having ownership (equity) in that company.
What are Shares?
The terms’ share’ and ‘stock’ are often changed interchangeably because the difference between these two is subtle. Stocks are whole pieces of equity ownership in a company, while shares represent slices or pieces of that ownership. That is to say that when you have stock in a company, you are part owner, and if you have a share of a company, you have a portion of a unit of ownership.
What Gives Stocks Their Value?
People often confuse stocks as representing the value of a company. But at its core, the value of a stock is what investors believe a company is worth or will be worth. That’s because a company’s value is its actual worth in dollars, but stock prices are based on perceptions about the company’s future success.
For example, a new social media company might only be worth one million in real dollars, but the aggregate of all their stocks could be much higher. This could be because stockholders see future growth potential in the company as more and more people are subscribing to its service and the stock prices are reflective of that potential.
Why do Companies Sell Stock?
Companies sell portions of ownership as a means to raise funds. This could be to expand to other locations, unveil a new service, or fund a new project or product. Then, as the company grows in value and future earning potential, the value of the ownership stakes also rises.
Understanding the Market
What is the Stock Market?
When people refer to the stock market, they are often talking about major indexes like the Dow Jones or the S&P500. These indexes represent a large section of the stock market and how it’s performing. Since tracking individual stocks would take a herculean logistical effort, following the performance of significant indexes paints a general picture of how specific economic sectors are doing.
How Does the Stock Market Work?
Stocks are bought and sold through exchanges like the New York Stock Exchange and Nasdaq. These exchanges work much like an auction house in which companies list shares of their stocks electronically, and investors make bids on those shares.
Difference Between Stocks and Funds
While stocks are securities that represent investments in a single company, funds are made up of many different investments. Long-term investors prefer funds because they are less susceptible to market volatility as they hold stock in several companies. One of the most common pieces of advice you’ll hear about investing is to diversify your portfolio – when you buy stock in a fund, diversification is baked in.
Our Approach to Stocks
Our team of investment experts has a combined century of experience in helping investors buying and selling stocks and funds. We have put together a series of strict guidelines and criteria to identify the investments most likely to show long-term earning potential. Focusing on our rigorous stock-selection process allows us to present our clients with high-quality, high-yield stocks while limiting their risk.
One of our primary goals is to help clients achieve their long-term financial goals. We accomplish this through a select dividend strategy that focuses on creating earning opportunities from dividends. We help you invest in a portfolio that contains between 15 and 30 high-dividend stocks across four sectors. We carefully select companies with strong balance sheets and positive earnings trends that also have a history of paying substantial dividends.
Want to Learn More About Investing in Stocks?
1879 Advisors has a long track record of helping thousands of clients meet their investment goals. We meticulously conduct due diligence on all of our offerings to structure investment plans that show safe long-term earning potential to take your money even further. Contact us today to learn more!
Securities offered through Bruderman Brothers, LLC, an SEC registered broker-dealer, member FINRA and SIPC. Investment Advisory Services through Bruderman Asset Management, LLC, an SEC registered investment advisor (copy of current Form ADV Part 2A and FORM CRS) are available upon request or at ).