Bulls, Bears, Runs, Crashes…no, we’re not talking about your last kegger, we’re talking about the stock market. Sure, you’ve heard a lot about it on the news, but what is it, really? Well, since you don’t know, we’ll show you all the ins & outs, all the little secrets, all the nuts and bolts of the stock market. Needless to say, we had to make a lot of stuff up.
Wall Street isn’t just a place. It’s a state of mind. A noisy, greedy, grubby, self-absorbed state of mind. You have to be wary when approaching Wall Street, there’s always a ton of traffic and the cabbies are insane. One of the first things you’ll you’ll notice is that there’s no wall! What’s up with that? Anyway, this is the place where the bulk of company stocks are traded. Many people liken stock trading to gambling, which it is not. Nobody ever serves you drinks while you’re losing money on Wall Street. And the buffets stink. You know, they call it stock “trading” but just try offering those people something to trade for. They only want cash! No baseball cards, no postage stamps, no shiny bits of aluminum. It’s really misleading and tends to lead to heated discussions especially in these days of heightened security.
To begin with the basics, Wall Street is the main place where stock certificates are traded. Stock is pieces of the company that it sells of itself to raise money. So, when you are a stock holder, you are actually one of the company’s owners. But if you try to take home office supplies, you will be arrested. Companies will sell stock so they can raise capital (cash) which can then be used to expand the business (hostile takeovers), modernize their infrastructure (fancy new offices) or buy some ready powerful influence peddlers (Republicans).
Now, people decided many years ago that there should be a place to go if you decided you wanted to sell or buy shares of stock. So in the 1700’s, the stock exchange was created to do just that. It was like a really low-tech Ebay. They first met to exchange shares on the corner of Exchange Place, which is an amazing coincidence when you think about it. Trading was originally done under the buttonwood trees but then moved inside after a few nasty rain storms. Special buildings were constructed where people could come together under one roof to shout and scream at each other to trade stock. Today, thanks to modern technology, people can now shout and scream at other people all over the world!
The market can do one of two things: It can go up or it can go down. This never varies.
Q & A
Q: What makes the market go down?
A: That’s caused by people selling their stocks. When more people want to sell stocks than buy them, the market goes down.
Q: Why do people sell their stocks?
A: Because the market’s going down.
Q: But wait a second…the market goes down because people
sell stocks because the market’s going down?
A: Welcome to Wall Street, Alice.
Wall Street is a mystery wrapped in an enigma wrapped in a knock-knock joke. The trick in following the stock exchange is learning what makes it go. There are several things which drive the market: Rumor, hearsay, innuendo, white lies and half-truths. They are all started by a guy named Sid who lives outside Cleveland. He does this for fun.
Buy low, sell high. Never fails.
There was a time when all trades where executed by brokerage houses. They had the personnel and equipment to
handle your trades, for a price. They were called “brokerage house” because you would go broke dealing with them. Today, thanks to computers, anyone can be a trader and watch the market. But since there’s a market trading anywhere in the world at any given time, you can pretty much forget about sleeping, since you can be wiped out during a nap. Isn’t technology grand?
Wall St. Definitions:
Bull market-market goes up, people want to buy.
Bear market-market goes down, people want to sell.
Pig market -everyone is after a quick buck.
Some people find the stock market very intimidating, so they seek out the advice of professional market analysts.
These professionals spend hours going over company spreadsheets, annual reports, and reams of research trying to figure out which stock to buy. Then they pick the ones with the best kick-backs.
Q & A
Q: What makes for a healthy company investment?
A: Remember, the higher the salary of the chairman of the company, the more he’s worried about keeping his pay. So look for companies that like to shut factories, lay-off workers and curtail services, which then allow them to keep all that money. They’re good investments.
Q: But that sounds stupid.
A: Go with the flow, Alice.
The lure of the market is so strong and inviting that your bank, insurance company and your retirement plan are all now trading stocks and you’ll be able to lose your shirt in so many different ways. And thanks to recent “improvements” in accounting practices, it’ll be as easy as falling off a log.
Many people feel the stock market is just a fancy get-rich scheme and the only money worth having is the kind you earn through hard work. These people are called “whistleblowers” and are the first to get laid off.
Wall Street Definition:
IPO (Initial Public Offering)- This is when a company first issues stock to sell to the public. This is a way for the owners of a company to make lots of money really fast, then get taken over and forced out before they know what hit them.
When investing, I like to buy stocks of companies I’m familiar with. You should, too. You like a certain toy? Buy stock in the company that makes it. You use a certain toothpaste? Buy that company’s stock. You like a certain movie because it shows you how to get over your feelings of inadequacies through use of indiscriminate violence and gunplay? Become a day-trader.
Remember, sometimes a stock goes down. So killing your broker when it does will not get you your money back and creates an enormous amount of paper work. Best not do it.
As we can see, the stock market is the spark plug that keeps the economic engine of this nation humming along down the highway of prosperity without having to make frequent stops at the rest stations of stagnation and fast food. People look to the market to see which way the nation is headed. And that should really freak you out; did you know Wall St. predicted 17 of the last 4 recessions? The nation’s economy is built on a bunch of guys screaming and throwing paper at each other! Really, it’s like giving millions and millions of dollars to that couple next door, you know, the one with the dog that you’re always chasing off the lawn.
Many people have gotten rich on Wall Street, thanks in part to all the people who lost money there.
Me? I got all my money invested in soda cans! It’s like money from home!