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Thursday, January 16, 2020

How to stock market investment

How to stock market investment

How to stock market investment

when you think of investing the first

thing that comes into mind is this

complicated world of the stock market

with so many charts and numbers it's

easy to get confused so let's break it

down and try to make a sense out of it

let's say you have built a business but

now you need some more money to expand

or maybe you just want a private jet

where do you get the money from here is

an idea for you why don't you break down

your company and sell part of it while

you keep the majority to stay in charge

that's what stock market is for and this

process is known as initial public

offering but how much money can you

actually raise let's take an example of

Mark Zuckerberg little toy Facebook it

went public in 2012 with 337 million

shares at a price of $38 a share not bad

right but when he realized that there

are so many more people who want a piece

of his pie he added another 84 million

shares and guess what he sold every

single one of them and raised 16 billion

dollars he literally became a

billionaire in just a few hours in fact

the stock price increased to $45 within

the first day of trading but it was too

early to celebrate because it felt back

to $38 by the end of the day and that

was just the beginning the bad news were

just starting in the next few weeks the

stock price crashed to as low as $20

twice smaller than its original price

now in order to understand what's

happening here we have to get to the

roots of the stock market in the past

stocks were acquired primarily for

dividends theoretically when you buy a

stock you become the owner of that

company which means that you like any

other owner have the right to the

profits of the company congratulations

you have purchased 10 Facebook stocks in

January of 2017 and now you are the

owner of Facebook exactly like Mark and

I'm not kidding here try not to laugh so

your company makes sixteen billion

dollars how much of that belongs to you

at the end of the day you have spent

thirteen hundred dollars to buy your 10

stocks but let's first take a look at

how much stocks are there

kotl it turns out that there are almost

3 billion of them I doubt that your 10

stocks matters now but let's be

optimistic because if we divide the net

income on the number of shares each

stock should earn you a little over $5

by the way that's known as EPS in other

words your 10 stocks supposed to earn

you $54 not bad right but that's just

hypothetically in practice you get

absolutely nothing the Board of

Directors is the ones who are going to

decide what to do with this money and

their first priorities to fill their

pockets and expand the company so no one

really cares about your 10 stocks but

don't worry not everyone is a scammer

like Mark Zuckerberg for example last

year Apple paid 13 billion dollars in

dividends or 2.5 dollars for each stock

of course it's not much for a stock that

cost $170 but something is always better

than nothing

however today it doesn't really matter

is how much the company pays as much as

the price of the stock itself Apple

stockholders experienced a 33 percent

gain within a single year that's way

better than markets average you probably

have heard that Apple is the first

company to cross a trillion dollar

valuation because its stock price cross

$200 but what if I told you that until

the June of 2014 Apple stock price was

$645 does that mean that the company was

already valued at more than three

trillion dollars oh god the stock market

is so freakin complicated

let me explain there is something called

stock splits each stock was split into

seven pieces and the prices were

decreased proportionally technically

nothing really changed but now more

people can afford the stock and join the

community of Apple investors since the

stock now cost only 92 dollars but not

all companies do that some prefer to

only work with serious people such as

Warren Buffett his company Bershka

Hathaway has never split their stocks

that's why it only has 1.7 million

shares income

Harrison Apple has five billion that's

why a single Buffett stock cost over

$300,000 I guess most of us will never

join Buffett's secret investors Society

but don't worry Buffett wouldn't mind

taking your money as well that's why he

created Class B shares which are more

affordable the topic of the stock market

never ends but this video has still as

always hit the subscribe button and the

bell besides it thanks for watching and

  • I will see you in the next one

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