Back to The Consumers' Eye Information Page

Reprint from the South Side Scoop.
The Educated Consumer
An interview with Derek D. McNeal

Understanding the Stock Market

If you have been planning to invest in the stock market after moving up to a certain income level, you might as well start now. To be successful at investing doesn’t take a lot of money, but it does take a particular mind set. Real money is not made overnight, just as reading one article does not give you a real education. The key to success in investing is consistency-not necessarily the amount you are investing. You can start out by investing $25 to $50 per month.

First, there are some terms that you should familiarize yourself with. The investment game has a language all its own:

Stock or Common Stock-An ownership interest (amount purchased or a number of shares) in a corporation

Mutual Fund- an investment company that combines the moneys of many people with similar investment goals and then purchases securities/stocks and bonds.

Stock Market-A place where publicly traded securities/stocks and bonds are offered for stale to the public.

Bull Market- “advancing” stock market where the stock prices are going up.

Bear Market-a “declining stock market where the stock prices are going down.

Commodities/financial futures-a contract to buy or sell for possible delivery in the future; some commodities such as soybeans and corn, are not taken into physical possession.

Down Jones Industrial Average- an indicator of stock market movement of 30 of the most widely followed industrial and other companies.

To become familiar with the stock market, it’s a good idea to start with a category that you are interested in or regularly do business with. Many people in the retail business follow retail stocks, the stocks of the larger retail stores; clothing manufacturers, and automobile manufacturers. Those interested in the arts often choose to follow the stock movements of record labels and television /cable networks.

You can begin to learn the basics-and the intricacies of the stock market by reading certain publications. Start reading them regularly, even if it is only once a year. Barron’s Financial Weekly is a newspaper that gives general financial advice and stock tips and ranks mutual funds. The Wall Street Journal is a daily newspaper that gives financial news and stock tips, and mentions general news that often hints at future trends in the market. Investor’s Business Daily is also a daily newspaper, but which has more stock-related articles, discusses individual stocks, and is the best publication for general financial advice.

This first book to buy for future investors is the Baron's Dictionary of Finance and Investment Terms. You need to learn the language of investing in order to understand the publications listed above. Other books you should buy are: How to Buy Stocks by L Engel and No Load Stocks by Charles Carlson.

Once you feel comfortable with the information you are taking in, you should consider stopping in at the following visitors information centers: