How do stockmarkets work?

[0xBRIANSMITH]

This is what I have gathered:

company A says ok we public, each stock is $10. Then person A says ill take 1 of those kthx. then every quarter they pay back 10% of the $10 (per stock)?

is there something I'm missing here?

[Ad Bot]

[vulnus]

If you don't know what you are doing and are looking to invest, don't.  Good thing you are asking what it is.  There are a number of sources you could have found searching it before asking.

http://www.youtube.com/watch?v=6H_zzmqy3DA

[Bisjac]

company A says ok we public, each stock is $10

companies do not decide what they are worth. the market (whatever one its in) itself decides before they put it up.

some stocks pay dividends, meaning you earn a % for every share you hold monthly or yearly, as long as you hold.
most stocks you just hold till you wanna sell, and they are only worth a penny the day you sell.

[0xBRIANSMITH]

If you don't know what you are doing and are looking to invest, don't.  Good thing you are asking what it is.  There are a number of sources you could have found searching it before asking.

I'm not looking to invest
but I may be looking to put a virtual stockmarket into what could possibly be a mod about something that might be relevant to a theoretical citymod.

[Mr. Hurricane]

That's the dividends part. Stocks fluctuate depending on how many people buy or sell. If a people buy a lot of a stock in a short time, the price per share will increase. If people sell their shares, the price falls. They also fluctuate depending on how the company is doing.

You can sell your shares and get back your money too, however you cease to receive dividends. The aim is to buy low and sell high.

[0xBRIANSMITH]

companies do not decide what they are worth. the market (whatever one its in) itself decides before they put it up.

how does the market decide?

[Bisjac]

how does the market decide?

not 100% cuz there are many things that reflect the price.
usually it about the profits made by that company, and the likeness of growth.
also debts they currently hold, mergers they recently made, number of employees they have. million things.
say you are going with the NASDAQ exchange, they may decide your company is worth 3 bucks a share. no debate lol. you dont have much choice really.

but if a company is likely to ever join the market, they dont usually wait till they would have opening stock of 50bucks a share. cuz that wouldnt promise much hype and buy in, and it would actually hurt the value a lot lol.

[0xBRIANSMITH]

not 100% cuz there are many things that reflect the price.
usually it about the profits made by that company, and the likeness of growth.
also debts they currently hold, mergers they recently made, number of employees they have. million things.
say you are going with the NASDAQ exchange, they may decide your company is worth 3 bucks a share. no debate lol. you dont have much choice really.

any equations maybe? The data that I have access to about each company:
- amount of workers (and how much they are getting paid)
- cost of real estate
- what they sell (and how much they are selling it for)
- the fees each month (paying workers, taxes, etc.)

[Bisjac]

once you join the market, it means your company is now all about growing. because stock isnt worth stuff if the company is just getting by breaking even. it much always improve at all times.

the biggest things that affect the price is

- debt, or the need to take on debt. its common for companies
- speculation on growth. can it be predicted or promised to gain +10% in profit every year for at least the next few years?
- number of current employees. wages are not important. the stock world dosnt give a flying forget about people lol.
- dependant companies. if your company is like 50% dependant on a specific mining company for material. and THAT company may go under lol. its a risk that affects your price.

[psychomutt]

if you buy a share of a company, lets say 1/10th, and the company at the end of the year makes 1000 dollars, youll get a tenth of what they made which is 100 dollars. thats the easiest way i cant explain it. correct me if im wrong.

[Bisjac]

if you buy a share of a company, lets say 1/10th, and the company at the end of the year makes 1000 dollars, youll get a tenth of what they made which is 100 dollars. thats the easiest way i cant explain it. correct me if im wrong.

most companies dont do that. thats dividend shares. and even when they do they wont let you spend less then 5-10k to buy in.

normal stocks you have to sell to make anything from.

[DiceyGrammar]

All of my money is in mutual funds and index funds so far

sound individual stock investment is pretty difficult, i haven't got valuing stock down pat yet

[SquartleTurtle]

you give a company money and if they fail you you make them pay with a 1950s gang suit and a baseball bat

[plad101]

http://www.youtube.com/watch?v=yIZaelw_cHE
Heres a little sing songy version.

[DrenDran]

All of my money is in mutual funds and index funds so far

sound individual stock investment is pretty difficult, i haven't got valuing stock down pat yet

I managed to turn about $1100 into $1400 over about six months, and many different investments. I'm planning to invest a few more thousand dollars by the spring hopefully with a bit of expirence now I can do even better.