What is a stock?

A stock represents a share in the ownership of a company. If you own a company's stock, then you are an owner, or shareholder, of the company.  A stock is also known as equity. 
 

Ownership of stock was represented by a stock certificate in the past.  These days, when you buy stock, you usually do not get the actual stock certificate any more.  Instead, your ownership is tracked electronically, making it easier to buy and sell shares.

So, now that you have stock and ownership of a company, what can you do? Not really very much. You will benefit when the price of the stock goes up, or lose if the price goes down. As a part-owner of the company, you are given the right to vote for company's board of directors.  The board of directors oversee the operation of the company.  They provide advice and guidance to the executives of the company.

Buying stock can be risky.  While the price of the stock may go up, it may also go down. If the company goes bankrupt, then you could potentially lose all the money you invested in the stock. However, that is what investing is all about; taking risks, in the hope of making money on your investment.

What Is The Stock Market?

The Stock Market is where you buy, sell, and trade stock.  There are many different Stock Markets around the world.  The some important exchanges are the New York Stock Exchange, the London Stock Exchange, the Tokyo Stock Exchange and the Toronto Stock Exchange.  All of them are always changing and are always busy.

If you buy stock from a company and that company sells a lot of products, the stock price from that company goes up.  If you buy stock from a company and the company sells fewer products then they soled before, the stock price goes down.  Many people do not understand the Stock Market.  It is not just a person pushing buttons thinking "I think this Stock should go up today."  It is people buying products from different companies that make the price of stocks change. For instance, Nintendo’s stock was booming because of people buying merchandise from the cartoon, Pokemon.

How Do You Buy Stocks?

If you want to invest in the stock market by buying stocks, you need to contact a stock broker.  A stock broker has a special license to buy stocks.  You will have to pay them for this service.

Why Do People Buy Stocks?

    
One of the many reasons people buy stocks is because people want to invest their money.  You make money in the stock market when people buy products from the company in which you own shares, and that company then makes a profit.  If you have stock in Canadian Tire or La Senza and the stock price goes up, you could make money. 

Buying stocks is a gamble.  The reason it is a gamble is because you can lose money if people stop buying the company's product and then the stock price goes down.  Yet, you can make a fortune if the price goes back up.  

How to Earn or Lose Money

You lose money when you buy stocks and something makes that stock price go down.  You lose money because you bought stock for a certain price and you then you sold it for a lower price.

Stock prices can go down for many different reasons.  Some of these reasons are:

1.   people stop buying products from that company
2.   the company is being sued
3.   the company is in debt

You gain money when the prices of the stock you bought go up but only if you sell that stock for a higher price than what you bought it for.   Stock prices can go up for many different reasons.   One of these reasons is if people buy a lot of that company's products.  Another is supply and demand.  This reason will be discussed in class.  You will be required to take notes during that lesson. 

How You Affect the Stock Market

You affect the stock market every day when you buy things like food, toys, etc.   For example, if IPods become even more popular amongst people, the stock price of Apple will go up.  If nobody buys IPods the stock price for Apple will go down.  This is only one way in which you can affect the stock market.

A Brief History

One of he first stock exchanges was formed in England in the year 1773 by some brokers from London.  Until that time, people who wished to buy or sell shares of stock had to find a broker to transact their business.  In London, these people usually went to a coffee shop because brokers often gathered there.

Wall Street is the most popular stock market in the U.S.A.  It is located in Manhattan, New York.  The TSX is the most popular stock exchange in Canada and is located in Toronto.  This is where you will make all your purchases for this project.
 
 

The Crash Of 1929

In 1929 lots of people started to buy stocks.  Many investors came into the stock market with borrowed money. The prices of stock rose steadily because of the interest of so many people.  On October 29, 1929, many people tried to sell stocks at the same time.  Then the New York Stock Exchange and other stock exchanges, dropped so suddenly that it was known as the crash of 1929.  Many people lost a lot of money.