WELCOME to Damodarans.com frequently asked questions (FAQs) area. Here we attempt to answer your queries on how the site works, where to find things and why we may have made certain changes recently.
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Questions:
01. What is Stock?
02. What is a Stock Market - How it Works?
03. What are the Basics of Buying Stocks?
04. How to Buy Stocks?
05. What does IPO mean?
06. Why do companies decide to go public and float on the Stock Market?
07. What other reasons can there be for a company to float on the Stock Market?
08. If the company is so good why would the owners want to sell some of their shares?
09. Can anyone float their company on the Stock Market?
10. Low Capital to Start With?
11. Starting Early Investments is advisable?
12. Which is the right time to start investing?
13. Can i get free trial?
14. Can I know about your website?
15. Can I do online trading on your website?
16. Do you conduct Frqee Seminars and Paid Technical Classes Regularly?
01. What is Stock?
When you own shares of stock you become part owner of a company. If the company does well, the value of your stock should go up over time. If the company does not do well, the value of your investment will decrease. top
02. What is a Stock Market - How it Works?
Stock market may be thought of in terms of two separate functions:
The primary market function: Where companies can raise long-term funds for their operations by issuing shares through IPO (initial public offers) to investors.
The secondary market function: Where investors can buy and sell those shares at current prices as determined by other investors in the stock exchange.
A place where Companies can raise capital: A Company that wishes to set up a new business or expand its existing business can raise the capital it requires either by borrowing money or by issuing shares to investors.
The investors become shareholders in the Company, meaning they are part owners of the Company and share in its profits and growth.
Companies wishing to have their shares traded must first be listed. To become listed, a Company must be large enough for there to be a market in its shares and it must agree to abide by the listing rules which, amongst other things, require it to keep the market informed of its activities and to regularly reports profits and other financial information.
A marketplace for buyers and sellers: After a Company has listed and issued shares to investors, the shares can then be sold to other investors in the stockmarket.
The buying and selling of shares takes place on the electronic trading system with staff at stockbroking firms entering buying and selling orders on behalf of investors.
The price of the shares is determined by the forces of supply and demand, as private investors and fund managers decide at what price they will buy and sell. Private investors are very important in the process as they control a large percentage of total funds invested in the sharemarket.
The sharemarket provides an opportunity for investors to contribute to and benefit from the wealth-creating activities of companies and in that way participate in the broader economy.
When you buy goods or services from listed companies, you are contributing to their growth and providing an opportunity for higher profits, which enables them to pay higher dividends to shareholders.
For private investors, wealth is created in the form of dividends and other income and capital gains from selling shares as prices rise.
The Company also benefits because, if there is strong interest in its shares, it will be able to raise additional capital when it needs to in the future.top
03. What are the Basics of Buying Stocks?
One of my called me and asked me for advice on buying and owning stocks. The first thing I asked him was who he was getting his advice from now. He told me that he got some tips from his friends.
I asked him how well his investments turned out so far. He told me that he hadn't made much money. I pointed out that if he was diversified, he should have been making a great deal of money. What he told me was that it was just bad luck! Sound familiar?
What he was looking for was a particular recommendation to make money on a stock! I told him I couldn't give him one. But I could give him some overall general advice.
First, your friends are the worst people to take stock picking advice from! Your friends don't know anymore than you do!
The second piece of information I gave him was that making money in the stock market is not a one shot deal! Money is made through a series of transactions over a long period of time. There will be both wins and losses. The object is to cut your losses short and let your winners ride! After that I explained why the stock market keeps on going up and down. Fluctuations occur partly because companies make money, or lose money.
But it is much more involved than that. A stock is only worth what someone will pay for it. Usually, if a company makes a lot of money, its value rises, because people are willing to pay more for a company's stock if the company is doing well. There are also many other factors that affect the value of stocks. One example is interest rates, or the amount of money you have to pay a bank to loan money, or how much it has to pay you to keep your money in their bank.
If interest rates are high, stock prices generally go down, because if people can make a decent amount of money, by keeping their money in banks, they feel like they should not take the risk in the stock market.top
04. How to Buy Stocks?
If you don't have an DP account with a stock brokerage firm and you want to buy shares, the first thing you need to do is you open an account with brokerage firm Please select type of person who provides research reports and advice The choice is yours! Remember that a full service broker is going to charge you more than a discount broker.
Setting up the account is relatively easy. Once it is done, you can call up and buy and / or sell stock.
Types of Orders You Can Place Market Order is probably the most common. When you place an order at the market, you are telling the broker to buy or sell the stock at the best possible price at that time. A market order will always be filled. The catch is that it may not be filled at the price you expected or wanted.
For instance, you want to buy shares of the XYZ company. You call your broker and he tells you that is currently trading at 95 bid 96 ask. The bid is the price the buyers are willing to buy the stock at. The ask is the price the sellers are is willing to sell the stock at. You tell him to buy 100 shares of XYZ at the market. When the broker gets back to you, he tells you that he bought 100 share of XYZ at 97! What happened? Between the time you gave the broker the order and the order was filled up, the price went up.
Keep in mind, that the price of XYZ could have easily been filled at 94 had more people been selling rather than buying at that time. A Limit Order is an instruction by you to your broker to buy or sell a specific amount of stock at a specific price or better.
If the price you specify is not within the current market quote, it is said to be away from the market and will be entered beneath any other orders.
What this means is that there are shares ahead of you. Orders get filled in the order that they were received. This happens quite frequently. There is no guarantee that a limit order will ever be filled.
When deciding whether to place a limit order or a market order, the trader needs to evaluate the tradeoff between a guaranteed fill which might be different than what you expect, and getting the price you want but perhaps not getting filled. It all depends on your analysis and your needs.top
05. What does IPO mean?
IPO stands for Initial Public Offering and refers to when a company initially goes to the general public via the Stock Market to offer its shares for sale and thus raise the money required to grow the company.top
06. Why do companies decide to go public and float on the Stock Market?
Generally the main reason why companies decide to float (making their shares available to buy by the general public) on the Stock Market is to gain access to the necessary funding to be able to financially support the future growth of the company.top
07. What other reasons can there be for a company to float on the Stock Market?
Sometimes the owners of the company float their company on the Stock Market as they want to sell some shares for immediate income.top
08. If the company is so good why would the owners want to sell some of their shares?
The immediate income received from selling shares allows the owners to benefit from the hard work they may have put into establishing and growing the company.top
09. Can anyone float their company on the Stock Market?
Yes any company can float provided the company meets the criteria asked for by the Stock Exchange that the company is been floated on.top
10. Low Capital to Start With?
One of the biggest problems for new investors is the amount needed to start investing. They often want to get started investing with very little money but find out that it is hard to do this and give up.
The fact is that if you want to invest in stocks, you usually need more money to start with than you need for a mutual fund. The reason for this is because if you invest with a small amount, a large percent would be eaten up in commissions.
On the other hand you can just keep setting aside money every once in a while until you have enough to make a larger investment. But if you want to invest in stocks rather than a mutual fund, it is usually necessary for you to have at least around Rs. 10000 to start with.
However, if you are a long-term investor, these shouldn't be a big concern for you because your account should appreciate over time and make up for the larger commissions.
So rather than getting discouraged and giving up on investing, use your patience, grasp the opportunity... and start investing in the stock market!top
11. Starting Early Investments is advisable?
There is never a bad time to get started investing. And there is never a really good excuse for not starting!
I don't care if you think the market today, or tomorrow, or next year is too high, or is going to drop even lower! I don't care if you think you don't know enough about investing. I don't care if you think you don't have enough money. Start investing as soon as possible!
It is not the amount of money invested that is really important, but when an investor gets started with a long term plan is critical. Time is the real best friend to an investor
The biggest success factor influencing your portfolio is how well you harness the power of time and the rate of return you earn on your investments.
The beauty of time is that it doesn't depend on how smart you are or how much money you have! Time is the great equalizer for investors. Indeed, time is available to everyone.
If time is the most influential factor on your portfolio's performance, it follows that the most important thing you can do is to get started in an investment program as soon as possible.top
12. Which is the right time to start investing?
We believe that the best time is right now! And this holds true whether you are 20 years old, 60 years old or somewhere in between.
Starting early gives you two major advantages:
The longer you have to invest, the more aggressive you can be when selecting investments, knowing you will have the time to ride out any possible short-term fluctuations.
A longer investment time frame enables you to capitalize on the true long-term value possibilities of your selected investments.top
13. Can i get free trial?
Yes, please Register in our site for 3 day free trial. top
14. Can I know about your website?
Our recommendations are purely technically based advice, we provide 4 to 5 calls a day after complete research about all indices and stocks, so three months frame of time is sufficient for getting good returns on your investment.But, in case of bull run, any stock can give good returns within one month too.top
15. Can I do online trading on your website?
No, our website is for recommendations only.top
16. Do you conduct Free Seminars and Paid Technical Classes Regularly?
YES, please see in our website were the next programme is. top