The Stock Market

Hi all,

I've been doing a bit of reading concerning the stock market with regards to what it takes to be a success or a failure. The online sim WallStreetSurvivor has been great help so far, but there is one situation which has left me scratching my head.

If you invest as part of a mutual fun or a CDF then you can be found borrowing much of what you've invested. The best example of this I found was:

"if the value of the $1,000 investment drops to $100, the investor will not only lose the dollar he or she contributed personally, but will also owe more than $950 to the bank (that's $950 owed on an initial amount of only $1 provided by the investor)."

That is all well and good, but what I don't understand is if you invest $100 and you stock plummets to $1, then do you owe the company you invested into money? If not, then do you still own those shares and if they shot back up to say $1000 could you sell for a profit still?

Would appreciate any help here as Google has made it somewhat difficult in finding the right answer. I appreciate there are better forums too.

Thanks

 

May be you are right, but i think its good investment these days as the market are down.

 

I'm not 100% sure what it is you are asking.But I have played the stock market for many years.I can give You some simple advice based on my own experiences.
Firstly diversify,never put all your eggs in one basket.Second do the research.For example 2 years ago I invested in a Canadian company that is developing an Aids vaccine.Imagine what will happen to my shares when they finally put it on the market? And lastly make the determination to invest long term.You have to have nerves of steel to stay the course in this volatile market.
I also started buying gold about 10 years ago,have done quite well with that.Also bought General Motors stock 2.5 years ago when they were about to declare bankruptcy.When I bought the shares were at the lowest since the Korean war,nobody wanted them and were selling at fire sale prices.I bought $40,000 worth,everyone said I was crazy.Try to imagine what those shares are worth today?
P.S. another tip I would give you is to invest in Canada savings bonds.These are low (4.5% return) but are 100% safe as the Canadian dollar is stronger and worth more than the U.S. buck.It's an alternative to banks which are all having problems and makes one nervous these days.
And lastly if you are in a position to do so,invest in real estate.This is where my real money is.
@GureVoodoo,thanks for the PM and ya sure why not?

 

If the stock plummets, then the net worth of the company goes down, so does the value of share you hold

Why not? That's how people are making money in stock markets!

No pain - No gain; If you are ready to take risk, then you can expect profit (and sometimes, loss too )

 

Thanks for that I appreciate the input, but what I meant by:

"That is all well and good, but what I don't understand is if you invest $100 and you stock plummets to $1, then do you owe the company you invested into money?"

Would I genuinely owe money or would I just simply have a worthless share?

 

I never tried to understand what the stock market is..IMO, Its just Corporate Gambling.If you think you can play well better than those , Play.

 

If that were to happen the company would cease to exist as it would have been either taken over or declared bankruptcy.But that kind of fall is impossible.It's always a slow fall so you would have had time to dump your shares.Then people like me on the other end would buy.Then wait till it rises and sell high and make profit.I have made much $$$ from people who panicked and sold out.

 

haha, I will have to hold my nerve early then to avoid you profiting from me!