How Do Stocks Work in 2022? Here’s What You Need To Know

A stock represents a means for companies to raise capital outside of a regular revenue stream. When companies sell shares of stock, they sell a small piece of ownership for interested investors to buy.

In doing so, investors get voting rights, dividends, and any gains from increases on the stock market.

Companies choose how many individual stocks they want to make available during the IPO process and each stock’s initial price.

Stocks and IPOs

Also known as “going public,” the process typically takes about six months. Upon completing this initial offering, publicly traded companies list on the stock market.

The primary factor driving the demand for particular stocks centers around a company’s ability to earn money and ultimately grow.

What Determines Stock Prices?

Generally speaking, as a company’s profits increase, so will share prices. Since a stock represents an ownership share of a business, most investors want to buy stocks that will increase over time.

You can make the stock market work for you, buy and sell for quick capital gains, or grab stocks that pay dividends.

How Do You Make Money From Stocks?

There are two avenues investors can pursue when looking at stocks: direct ownership and indirect ownership.

How To Invest in Stock

- Price-to-earnings (P/E) Ratio - Market Capitalization - Past Performance

What To Look For When Picking Out Stocks

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