Posted on 23 July 2011.
The best stock market advice is to first understand the definitions of what the stock market is comprised of and to understand basic strategies that are used to make money in the stock market. The Internet has opened up a wide array of stock market advice that is easily accessible to investors, including stock market definitions and basic strategies, which are outlined below.
The Stock Market is really a collection of stock trading markets, which themselves are comprised of thousands of individual stocks. The major stock trading markets in the United States are the New York Stock Exchange Euronext (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ). In 2008, The American Stock Exchange (AMEX), which was considered another major stock trading market, was purchased by the NYSE, and is now a division within the NYSE. The NYSE and NASDAQ have stringent listing requirements for companies that wish to have their stocks traded on their stock markets. These requirements include such metrics as maintaining: a minimum number of shareholders, a minimum bid price for the stock, and a minimum market capitalization.
In addition to the major stock trading markets, tens of thousands of company’s stocks trade on Over The Counter (OTC) stock quotation systems, which include the Over The Counter Bulletin Board (OTC BB) and OtcMarkets.com (Pink Sheets). Stocks that trade on the OTC BB do not have to meet any listing requirements, with the exception that they must be fully compliant in their reporting to the Securities and Exchange Commission (SEC). There are no listing requirements for stocks that trade on the Pink Sheets. However, Pink Sheets has its own tiered ranking system for stocks that trade on their quotation system. This ranking system segregates companies based on their reporting status to both the SEC and to Pink Sheets.
There are three major Stock Market Indexes that are used to gauge stock market performance, including: the Dow Jones Industrial Average, the NASDAQ Composite index and the Standards and Poors 500 index (S&P 500). These indexes are comprised of companies that are selected based on their representation of segments of the economy. The Dow Jones Industrial Average index focuses on industrial companies. The NASDAQ Composite index focuses on technology companies. The S&P 500 index is a broader index that focuses on a wide variety of companies.
Stock market advice as it pertains to stock market investment strategies comes down to one basic investment rule that is known as buy low sell high. The whole point of investing in the stock market is to make money, and to do so you have to buy when a stock is low and sell it when it is high. To better understand what a stock is and how to value a stock to determine when to buy and sell, see Advice On Stocks – Definitions and Valuation Method.
Understanding how the stock market performs in relation to economic cycles can improve your investment performance. Many of the best buying opportunities in the stock market occur when the economy is going into a recession and a stock market selloff occurs. There’s an old saying on Wall Street, “buy stocks when nobody else wants them”. This is perhaps the best stock market advice of all, since eventually the stock economy will grow again, companies will report growing earnings, and the stock market will respond by moving higher.
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