| There's so much jargon out there these days that | | | | health care initiatives of the government). |
| sometimes it can be confusing for the novice to | | | | The next step is to conduct online research. Log in to |
| understand stock market terminologies and functions. | | | | the numerous financial websites such as Yahoo |
| So how to understand the stock market then and | | | | Finance and start researching. Look at stock |
| make sense of it all? | | | | movements, look at stock tables, read analytical |
| The first thing you need to do is get with the lingo. | | | | reports and familiarize yourself with the working of |
| You can look up sites such as Investopedia or | | | | the stock market. You can even set up your own |
| Investor Words for definitions that you some across | | | | online trading account for practice on stock investing. |
| while reading the financial section of the paper. | | | | Learn the functions of brokers, brokerage firms and |
| Common terms you should know are "market | | | | specialists on the trading floor. Learn how each |
| capitalization", often simply called "market cap", P/E | | | | contributes, along with the buyer and seller, to |
| ratio, earnings per share, dividends, book value, stock | | | | determining the stock price for any given day. Do a |
| price, and yield. | | | | little research on the services offered by full service |
| Once you understand the language, you can move to | | | | brokerage firms and by discount brokerage firms and |
| analyzing a company's financial reports: read balance | | | | understand the differences in services and |
| sheets, annual shareholder reports, profit and loss | | | | commissions. While full service brokers may offer |
| statements, cash flow statements and familiarize | | | | value in terms of stock management and advice, |
| yourself with these accounting concepts. Read about | | | | discount firms will get you a trading account and let |
| their long-term plans, directions for growth, which | | | | you learn and manage on your own, so choose a |
| sectors they want to grow and invest in, product | | | | style you're comfortable with. |
| developments, brand loyalty, market goodwill, and | | | | Read books, magazines and investor advice on how |
| more. | | | | to understand the stock market. Play simulation stock |
| Next, you need to do some basic economic research. | | | | market games by not investing real money but |
| What's a bull market, what's a bear market, | | | | practice in the virtual world until you get the hang of |
| recession, depression, economic downturn, market | | | | it. |
| analysis, etc – familiarize yourself with these | | | | Learn how to invest for income or growth and not |
| economic terms. | | | | for speculation, which might be risky for a beginner |
| A crucial part of how to understand the stock | | | | and could burn you right at the start, thus making |
| market is to understand government reports, | | | | you afraid to delve deeper into stock market |
| outlooks and analysis. You should read reports put | | | | investing. |
| forth by the Securities and Trade Commission, be | | | | Learning how to understand the stock market is a |
| aware of the activities of the Federal Reserve and | | | | crucial first step before you can begin actual investing |
| any rising or falling interest rates, and be generally | | | | practices. Follow the strategies outlined here to make |
| aware of any government legislation that will directly | | | | sure you've covered all the bases in your research. |
| or indirectly impact your stock portfolio (e.g. if you | | | | This way you will start stock investing more |
| want to hold stock in healthcare and biotechnology | | | | confidently. |
| companies, you'll obviously pay close attention to the | | | | |