What is the Stock Market?
In a nutshell, a stock market is where you go if you want to buy and sell stocks. A stock is a partial ownership of a company enabling the owner of stocks to profit from the success of the company even if he or she did not take part in the creation of the company and is not one of the corporate leaders of the said firm. Thus, a stock is also known as shares of a company because the owner of the stock gets a certain share of the company’s assets based on the number of shares that he or she owns.
If you purchase a share of a company you become an investor of the said business enterprise. Your fortune rises and fall depending on the performance of the company. In an ideal scenario, you purchase a stock at the beginning of a fiscal year and at the end of that time frame, whatever profit the company earns you get a share of it depending on the number of stocks you have acquired from that particular firm.
Stock Market Investing
It would have been nice if investing in the stock market is as simple as the framework outlined above. Unfortunately, the stock market is very complicated. As you go deeper you will realize that it is not just about partial ownership, there are different mechanisms involved, so that the value of your stock will rise and fall erratically without a logical explanation for its behavior. The value of your stock fluctuates because other investors are not interested in holding on to their stock and there is a way for them to sell and buy back their stocks. The value of the stock is not fixed and aside from the performance of the company, it is also affected by how the public perceives its value in the short term.
Energy Stocks Today
In recent months the stock market has been doing well and in general investors are making money. One of the hottest commodity sold in the stock market are energy stocks. These are shares of companies that are into the following: oil and gas exploration and production; oil and gas storage and transportation; and oil and gas equipment and services.
According to stock market analysts one of the more profitable energy stocks in today’s trading is ConocoPhillips with a five-year total return of 227%. Another good pick is Northern Oil and Gas Inc. with a five-year return of 171%.
There are two ways to make money in buying stocks. The first one is through capital gains and the second one is through dividends. When the company’s assets appreciate after a fixed time period or when its revenue increases after a fixed period, the value of the company’s stock also increases. When you sell this particular stock, the profit made is called a capital gain. Now, when you buy a company’s stock and you hold on to it, there will come a time when the company’s board of directors decide to distribute a portion of the company’s earnings to its shareholders. As an investor you get a share of those earnings.