🎉 A5 - CAPITALISM: HOW THE STOCK MARKET WORKS (ASPIRE-TO-DO)

Another term for "stock" is "share."

A stock represents a portion of ownership in a company.

If Amazon divided its company into 1,000 shares and you bought one of those shares, what fraction of Amazon would you own?

In real life, there are about 1,000 people who own shares of Amazon today.

Owning common stock means that you have the right to vote on certain matters when it comes to company business.

A dividend is basically a piece of the company's profit that gets paid to shareholders.

The main reason why companies sell stocks is because it helps them raise money they need to operate or grow their company.

Stock prices are usually based off of how much money a company has earned in the past.

Only very large companies have the ability to earn billions of dollars by selling stock.

When companies decide to sell stock in the stock market, they move from "private" companies to "public" companies.

If more people want to buy a stock, then the price of the stock usually drops.

Imagine that 100 people offered to buy a product that you posted for sale on Craigslist. It is very likely that you could increase the price and still have people willing to buy your product.

The price of a product tends to go up when there are more sellers than buyers.

Stocks are generally more expensive if more people want that stock.

It is possible to make a lot of money by investing in the stock market.

As long as you increase your wealth by more than 3% each year in the stock market, then you are doing better than you would by just keeping that money in the bank.

The first step in investing is to get an account that allows you to buy and sell stock (ex: e-trade.com).

The cheapest stocks to buy still cost at least a few hundred dollars.

The good thing about the stock market is that you can never lose the money that you invested in a company.