Share Market Basics

By Trevor Hurst

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Share Market Basics

To the uninitiated, shares may seem a little like some imaginary game that people play. In the days of share certificates one could be forgiven for thinking that people were buying and selling pieces of paper. These days there are no longer even pieces of paper to recognize ownership, just electronic ‘blips’ on a computer system. This may create an appearance of insubstantiality, but keep in mind that any apparent lack of substance is only that – an appearance.

Real estate enthusiasts sometimes use the expression ‘kick the bricks’, implying that a house is a real object and that therefore it is somehow safer as an investment. However, the ownership of any particular property is registered on a contract (or a piece of paper), which is then turned into a computer ‘blip’. Buying and selling real estate is nothing more than changing signatures on pieces of paper.

A share is also nothing more than a registration of ownership. The ownership in this case is of a company. A company in turn is simply a legal identity that owns real things. These real things include objects such as real estate, land, cash, and inventories. Companies also own less substantial things such as copyrights, intellectual property, and mastheads. This list is not exhaustive and the property of shareholders will vary depending upon the business.

The point is that if we own shares in Wal-Mart as an example, we can go down to the nearest Wal-Mart store and ‘kick the bricks’ to check the substantiality of our investment. Those who own shares in a company are the legal owners of the firm’s assets (less the debts). This is not substantially different from ownership of any object such as a car or house.

Investing and trading in shares is a profession. All of those who are successful, and there are NO exceptions to this, treat it as such and never as some idle time hobby. You don’t need to BE a professional, but you do need to APROACH this like a professional. You then enter a different world; one where the daily news and financial media reports may be interesting, entertaining, worrying, confusing, and even comical but they are of little, if any value to us as we make our trading and investing decisions. Indeed they are usually of no more value than the “expert” advice freely available in any hotel bar or at any Sunday afternoon social or around the work-place water cooler.

Like anything else, there are a few simple things to learn, tricks of the trade so to speak, that will make all the difference for you. Way too many people seem to think they can just waltz in with no special training and succeed. This baffles me. Nobody in their right mind would expect to enter any other profession in the world with absolutely no training and yet we see this all the time in the investment industry.

Misconceptions and erroneous beliefs abound. For example: shares are risky; the stock market is a casino; you have to watch your stocks 24/7 and so on. The reality is shares represent a wonderful opportunity for anyone with nothing more than a junior high school education to make some serious money.

Take the time to learn your craft. There should never be a sense of hurry. Share trading (and investing) using our proven simple and safe method is very exciting and rewarding. Few people ever experience the sense of true security and peace of mind this brings and which, in due course, will be yours forever.