Introduction                                                                                      

This is a book explaining the basics of how the stock market works.  It covers the following topics:

What is a stock?

Why invest in stocks?

How does the stock market work?

How did the stock market start?

At the end of this book, I show you the steps to investing in the stock market and how I did it myself. I also include some great tips for first time investors.

             What is a Stock?

A stock allows you to own part of a company. Each piece of the company is called a share and if you own a share you are a shareholder. To own a share you must purchase it from an exchange where stocks are bought and sold. You can buy a big or small part of the company and the price for a share of each company is different.

             Why Invest in Stocks?

When you own stock if the company makes money, then you make money. If the company loses money, then you lose money as well. But if you choose good companies to invest in then they may lose money sometimes but most of the time they make more than they lose and that means you will make money.

          What is the Stock Market?

The stock market is a place where you can buy and sell stocks. This is called trading stock. 

The New York Stock Exchange (NYSE) and the NASDAQ are the two main American exchanges, both of which are headquartered in New York City. They are each open Monday through Friday from 9:30 a.m. to 4 p.m. EST. Both markets close for nine federal holidays per year, including New Year's Day, Martin Luther King Jr. 

     How Did the Stock Market Start?

The world's oldest stock market began in Belgium in 1460. The oldest U.S. stock market exchange opened in 1790 in Philadelphia. The Bank of New York was the first company to list on the New York Stock Exchange, in 1792. To get a seat on the New York Stock Exchange it costs millions of dollars.

Steps to Invest in the Stock Market

Step 1: Open an online investment account. 

Step 2: Research good companies to invest in and buy their stock.

Step 3: Track your stocks and make changes based on their performance. 

How I Invested in the Stock Market

Step 1: I opened a Fidelity investment account on 12/18/20 with $100. I bought $20 worth of stock in each of the these companies: McDonald's, Starbucks, Microsoft, Amazon, and Apple. 

I chose those stocks because they all showed good potential to make money soon. Here are some of the things I considered when choosing these stocks:

How I Invested in the Stock Market

I've been eating at McDonald's since I was a little kid and it's still my favorite fast food restaurant. They have great food and are always bringing back seasonal items that everyone loves and is waiting for, like their spicy chicken wings and their slushies. So, I thought this would be a good company to start with.

How I invested in the Stock Market

Starbucks was the next stock I bought. They're always coming out with new drinks and even have a mystery menu.  I found out that they were getting ready to come out with a new drink for Christmas.  So, I saw great potential for them to do well.

How I Invested in the Stock Market

I chose Microsoft because they made a huge update to one of their games (Minecraft) that made even me buy it.

Amazon just entered Christmas season so I expected they would get a lot of orders.  We were also still in the middle of a pandemic so I guessed that most people would do their Christmas shopping and even their regular shopping online instead of heading to the mall.

How I Invested in the Stock Market

Finally, I chose Apple. Apple has always been a leader in technology mostly because of their iPhones. I heard they were going to come out with the Iphone 12, which had a regular and mini version. I knew there would be a lot of people wanting to get them as soon as they were available. I chose different types of companies so that if one industry is doing terribly, all of my stocks don't lose money at the same time. This is called diversification.

How I Invested in the Stock Market

Step 2: In order to figure out which stocks to buy, I looked at the performance of several stocks and decided to buy McDonald's, Starbucks, Microsoft, Amazon, and Apple. I bought all of the stocks through the Fidelity investment app on my phone. There were some companies I liked, but decided not to buy.  For example, I think Netflix is a good company, but they recently increased their subscription price and that was having a negative effect on their stock price.