Stock Basics

I am not a stock broker, I am just a normal person who had never heard anything about stocks until I began making personal webpages at GeoCities. At the time, back in the late 90s, GeoCities was a free webpage hosting group which had hundreds of thousands of "members" who made webpages on a variety of topics. I enjoyed GeoCities a lot and eventually volunteered my time as a "community leader". I helped out watching for spammers and porn, assisting people with HTML, and that sort of thing. GeoCities did very well and eventually they decided to go public. As a "thank you gift" to their community leaders for helping out for free all those years, they gave each of us 10 shares of stock.

Amazingly, many of the community leaders refused the gift, not knowing what stock was. I figured I'd take it, what was the worst that could happen? They did poorly? As it turns out, the stock launched at $100/share, so I immediately got $1,000 from this gift!

GeoCities had created us all E*Trade accounts as part of this transaction, so I now had an E*Trade account to play with, and "free money". I sold the GeoCities stock and invested in other things. This was the time of the net stock boom so it was a lot of fun. All the stocks were going up, and E*Trade made it very easy to click the "buy" and "sell" buttons on whatever you wanted. You could see your investments grow with their graphs, and research your options.

Very luckily, I decided to sell everything before the crash occurred. So my timing was just right!

This is what buying stock is all about. It's really very simple. You have to buy low, and then sell high. You have to buy at a time you feel the stock price is at a low point and will start increasing. Your aim is to sell when the stock is at a high point and will probably go down. Really though if you sell after the stock has gone up, you are doing well. Many people get stuck with stock that has gone down, and they have lost money.

So let's take an example. Let's say Amazon is currently $10 a share. You tend to buy stock in "shares". This is simply a unit of stock.

So if you have $200 to invest, you would buy 20 shares of Amazon at $10 a share. 20 x $10 = $200. Depending on which company you use to make this purchase, they might charge a transaction fee too, so be sure to take that into account. There are many places you can buy stock through - E*Trade happens to be the one I use, but there are many other choices. Feel free to do web searches to figure out who has the best services based on your needs.

So once that transaction goes through, you now have $200 worth of Amazon stock! Congratulations!

Now let's say in 3 months that Amazon's price has gone up to $30 a share. That means your 20 shares of Amazon stock are now worth $600! If you sold them right now, you would receive a check back for $600. That's how investing works!

Of course, if Amazon had a bad set of months and their shares went down to only $10 a share, you would have lost money. So your aim is to research a company well enough to know their future plans will earn them money, not cause stock price issues.

Again I'm not a stockbroker, so your best bet is to sign up with E*Trade or one of the other trading sites and read all their helpful how-to information to learn more about the details!

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