LogFAQs > #140982

LurkerFAQs ( 06.29.2011-09.11.2012 ), Active DB, DB1, DB2, DB3, DB4, DB5, DB6, DB7, DB8, DB9, DB10, DB11, DB12, Clear
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TopicNintendo's stock is at a 5-year low. Good time to buy?
Dauntless Hunter
07/28/11 10:41:00 PM
#30:


stocks are a unit of ownership in a company, when you buy stock in a company you own a (usually very small, unless you're buying a huge amount of stock which youd basically need to be very rich to do) part of it

the price of a stock is determined, at a basic level, by how well the company is doing financially/how well they are expected to do in the future

the goal of the stock market is to buy low and sell high, so you want to buy stocks that you think have the most potential to go up

for example a company like say apple or google already is doing really well, so even if you expect them to go up it probably wouldnt be by much compared to what you'd have to spend to buy. like if a stock goes from $100 to $105 yeah you made money but very little. what you'd rather have is a stock that went from like $5 to $105

the risk is that just because a stock is low now doesn't mean it will ever go up, and could end up going even lower. or, if it does go up, you need to figure out the right time to sell. if a stock keeps going up you'll be tempted to stick with it, but if you wait too long it could start to drop. maybe not below what you paid to buy it, but you lose out on money you coulda had if you sold earlier. by the same token, you might sell too early and it keeps goin up and you miss out on money that way.

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