This video gives a perfect idea of what a stock is. A company, lets call it Facebook (which is not actually public…yet) decides to increase capital so they go “public”, by going public they are creating equity to individuals. So, “facebook”, is now considered an IPO, Initial Public Offering. (Which is a long extended process) Consequently, individuals can “buy” stock and later, “sell” stocks. Since 1926, the average large stock has returned close to 10% a year. If you’re saving for retirement, that’s a pretty good deal — much better than U.S. savings bonds, or stashing cash
under your mattress.
This is just a brief introduction to the stock market. Check out each of the links above regarding, risk, fundamental analysis, and strategy. To have a better understanding of how the stock market works.