This tag is to be used for any questions related to Stocks. Ideally they should be accompanied by a country tag if relevant. It is discouraged to ask question about a specific stock. However an example can be used to illustrate a point.

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121
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13answers
26k views

Why would a company care about the price of its own shares in the stock market?

After a company has issues shares, why should it care if the value of the shares go up and down? Since the shares are now being traded among the public, if the value goes up or down, that is strictly ...
80
votes
12answers
51k views

In the stock market, why is the “open” price value never the same as previous day's “close”?

This is something that is mind-boggling to me, and it is particularly obvious in candlestick graphs: Why is the open value never the same as the previous day's close value? This is something I just ...
73
votes
7answers
10k views

Why is stock dilution legal?

What I always heard, since I was a child, was that if you own a stock share, you actually own a small share of a company. That seems to be the general consensus of what a stock share is. Well, that ...
63
votes
6answers
31k views

Why is the stock market closed on the weekend?

It's all digital and done with computers these days, so why bother? Doesn't that just make the system less liquid, which is the opposite to one aim of having the stock market? Plus can't you just ...
58
votes
8answers
7k views

Why does a company pay dividends at all?

If a company can lower the dividends and even stop paying them at all during hard times, why would they re-install them at all? If I understand correctly a company pays dividends so that investors ...
48
votes
3answers
155k views

Can someone explain a stock's “bid” vs. “ask” price relative to “current” price?

In my online brokerage account, I want to buy a particular stock and I see : Bid: 13.20 x200 Ask: 13.27 x1,000 the current stock price is : 13.22 Can someone explain what the bid and ask ...
40
votes
18answers
12k views

I carelessly invested in a stock on a spike near the peak price. How can I salvage my investment?

I carelessly invested on stock on a spike (I have been persuaded by a family member) and now my investment value is really low, as you can see below. Is there anyway to salvage my investment for ...
40
votes
12answers
10k views

Why is day trading considered riskier than long-term trading?

I have read all of these disclaimers about day trading emphasizing how experienced and cautious you have to be. But I don't see how it's any different than buying a stock at a low price and holding on ...
40
votes
8answers
32k views

Theoretically, if I bought more than 50% of a company's stocks, will I own the company?

Inspired by this question, I wondered what the implications of owning the majority (> 50%) of a company's stocks are. Will I own said company? Will I be able to call the shots? What if someone was ...
39
votes
3answers
7k views

How did this day trader lose so much?

I recently read this article about a day trader that lost $100,000: A trader started a GoFundMe page to pay back $100,000 to E-Trade after a disastrous short Please explain this, because I can not ...
33
votes
11answers
12k views

One of my stocks dropped 40% in 2 days, how should I mentally approach this?

Right after the event, I felt shocked and depressed. I've been engaging in stocks for about a year now but I've never encountered such a big jump in such a short time. What I'm planning to do is just ...
33
votes
6answers
9k views

Can a CEO short his own company?

I'm just curious, it seems a CEO could make a lot of money by shorting a huge amount of shares on his company through a third party and then purposefully tanking the company before being fired. Surely ...
32
votes
10answers
31k views

Options for dummies. Can you explain how puts & calls work, simply?

I never understood Puts or Calls. Could anybody explain it like I were a child?
29
votes
7answers
8k views

Why is it rational to pay out a dividend?

Imagine a mature company, which has stable earnings and made a profit this year. The company is planing to pay out a part of this earnings to its shareholders. Assuming the stock price goes down ...
28
votes
5answers
12k views

If I have $1000 to invest in penny stocks online, should I diversify risk and invest in many of them or should I invest in just in one?

I have $1000 to invest. I use Scottrade to invest in penny stocks online, they charge $7 to buy a stock and another $7 to sell it ($14 in total). Given the high volatility of these stocks, what tactic ...
27
votes
2answers
21k views

Difference between GOOGL and GOOG

Why are there two ticker symbols for google ( GOOGL and GOOG ), they seem to be mostly identical but when I look at their market values they result in different values currently: 551.64 for GOOGL ...
26
votes
12answers
12k views

Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”?

I have a 10 stock portfolio and considering market conditions that are on the rise when this question in being asked, a few of them did hit their 52-week high price. I would like to call myself a ...
25
votes
7answers
2k views

Shares; are they really only for the rich/investors?

I've always been under the impression, that if you want to be a player in the "shares game" you either have to be an full time investor, or someone who has a lot of money to play with. Is this true? ...
25
votes
4answers
31k views

How does a public company issue new shares without diluting the value held by existing shareholders?

When a public company issues new shares, the total number of shares traded in a secondary market goes up. Assuming there is no change in the fundamentals of the company and the profitability, I would ...
25
votes
3answers
634 views

What are “preferred” stocks? How are they different from normal (common) stocks?

What are "preferred" stocks? How are they different from normal (common) stocks that you can buy on a stock exchange?
24
votes
6answers
10k views

Why do people buy stocks that pay no dividend?

Before recently, Apple Inc. did not give dividend to shareholders. This makes me curious why people buy Apple Inc. stocks; while it might be due to the expectation of selling stocks at a higher price,...
23
votes
7answers
7k views

What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out?

What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out? I guess I am confused: If you know the yield and when the dividend will be paid out, why ...
23
votes
7answers
1k views

Why is the dominant investing advice for individuals to use mutual funds, exchanged traded funds (ETFs), etc

The dominant advice on this site (including that which I give to novices) regarding investing is to only invest in fund vehicles (mutual funds, ETFs, etc), rather than in individual stocks. Why is ...
22
votes
4answers
2k views

How do I invest and buy/sell stocks? What does “use a broker” mean?

This is an embarrassingly basic question. I'm a college student and know very, very little about the world of investing and purchasing stocks. I realize that some Googling could find me the answer ...
21
votes
2answers
2k views

Mutual fund value went down, shares went up, no action taken by me

I have no prior experience with stocks so please forgive me if this is a dumb question but I don't even know what to try googling. Two days ago I signed up with scottrade. I put $1000 into ICENX ...
21
votes
3answers
3k views

Why does demand for stock rise when a company appears to have high future value?

So a company decides to raise money by selling shares of its stock. The stock is offered at an initial price of their determination. The stock is then traded in a market where forces of supply and ...
20
votes
7answers
4k views

Is it true that 90% of investors lose their money?

Many investment gurus state that majority of investors fail and then offer a proven "[insert fancy name] investment strategy" that will make you successful. The number usually starts at 90% and often ...
20
votes
8answers
2k views

Why is Insider Trading Illegal?

I feel I must first make the confession that I know very little about stocks and trading them. But when I heard the news of Raj Rajaratnam convicted and what he was convicted of (insider trading), it ...
20
votes
6answers
3k views

Can a shareholder be liable in case of bankruptcy of one of the companies he invested in?

I know it's a silly question before I ask but let's ask it anyway: Let's say that X buys 10 shares of a public company Y in the stock market. Let's also assume that Y, at some point, goes bust while ...
20
votes
8answers
4k views

How risky is it to keep my emergency fund in stocks?

Everybody says you should keep an emergency fund of 3–6 months of expenses in cash or near-cash (CDs, treasuries, etc.). I know this is heresy but if you have funds for significantly more than 6 ...
18
votes
6answers
2k views

How do I get into investing in stocks?

How do I get into investing in stocks?
18
votes
3answers
5k views

What is the meaning of “short selling” or “going short” a stock?

Can someone please explain the meaning of 'shorting' a stock with an example?
18
votes
6answers
11k views

Do stock prices drop due to dividends?

From Personal Finance for Dummies, page 209: Dividends Dividends are income paid by investments. Both bond funds and stocks can pay dividends. Bond fund dividends (the interest paid by the ...
17
votes
4answers
858 views

How to invest in stocks without using an intermediary like a broker? Can shares be bought direct?

I am looking to buy stocks but I would like to do so without a broker. From what I can tell, the exchanges are good ole boys clubs that require you know (or pay) someone in order to participate. Am I ...
17
votes
5answers
7k views

What is a good asset allocation for a 25 year old?

I have a mid-sized portfolio (under $100K). And am currently in 100% stocks. I have seen some advice being given that states 80/20 bonds will yield similar returns as 100% stocks with less volatility.
16
votes
7answers
5k views

Is it wise to invest money in the stock market?

My uncle wants me to invest money in buying shares. I would like to ask these questions to my fellow users: Is it wise to invest money in the stock market? Is there any age limit to start into stock ...
16
votes
5answers
7k views

How exactly does dealing in stock make me money?

Soon I will be coming into a bit of extra money. Rather than simply sticking it in a savings account I would like to make my money work for me and getting into stock seems to be a good way to do that.
16
votes
5answers
1k views

How to evaluate stocks? e.g. Whether some stock is cheap or expensive?

What kind of information do you obtain before buying (or selling) a stock? I know the PE ratio is very important, but not the only thing. Are there any rules of thumb to determine whether some stock ...
16
votes
4answers
1k views

Does doing your “research”/“homework” on stocks make any sense?

One thing about investing has always bothered me. You constantly hear people saying you need to "do your research" or "do your homework" on a company before buying their stock. I rarely watch Mad ...
16
votes
3answers
15k views

If a startup can always issue new shares, what value is there to stocks/options?

Since in most startups the board can issue more shares at will, what does it mean for an employee to own X% of the shares? When signing up, can an employee protect himself from the company printing ...
15
votes
2answers
5k views

Buying shares in a company after you quit

US law dictates that you cannot buy / sell shares in a company you work for except during open trading windows. I understand lockout periods when you're in a company but what about after you quit? ...
15
votes
3answers
3k views

If I create software that can identify and predict insider trading, and I use that to trade, am I insider trading?

Inspired by this question, and I don't know much about insider trading beyond it. The title pretty much says it all. Let's say I make software that picks up on patterns of insider trading. (For ...
15
votes
4answers
3k views

Book or web site resources for an absolute beginner to learn about stocks and investing?

I'm completely new to the world of investing and stocks. Knowing that I shouldn't invest or buy stocks until I know it well enough, I was wondering which cheap or affordable resources would be the ...
14
votes
4answers
2k views

How does one value Facebook stock as a potential investment?

What techniques would you use to valuate Facebook to determine whether its current stock price is inflated, or whether it represents a good investment?
14
votes
4answers
820 views

May 6, 2010 stock market decline/plunge: Why did it drop 9% in a few minutes?

Today (5/6/2010) the market dropped almost 900 points in less than an hour. I don't see any news story that explains the drop. Am I missing something obvious?
14
votes
5answers
1k views

Is losing money in my 401K normal?

I had about $10.5K in my Fidelity 401K account invested in their target fund. I started it a year ago. This is my first time with investing in the stock market. For the past 2-3 months, it keeps ...
14
votes
4answers
2k views

What is insider trading exactly?

I know that insider trading is illegal. However, is it true that the CEO of a listed company can still buy/sell their own stock? If he/she does so, isn't that technically insider trading? Or why is it ...
14
votes
7answers
11k views

How much percent of my salary should I use to invest in company stock?

My company allows me to purchase stock at 90% of the closing fair market value. My salary is in the 90k-100k range. I am allowed to put in anywhere from 1-15% of my paycheck in company stock up to a ...
14
votes
1answer
1k views

How are the shares rounded off when companies merge?

I had bought 100 shares of company A back in 2009. However, that company merged with company B, and they announced that I will be receiving 1 share of company B for every 8 shares held in company A. ...
14
votes
4answers
1k views

Who owned my shares before me?

I understand that this would not be public info but is is possible for a company/the market to know the full history of individual share ownership? i.e. if I just bought some shares of a company, ...