I want to welcome you to the stock market for beginners Ultimate Guide if you're new to the stock market then this video will be perfect for you so I want you to know that every experienced investor in stocks was once a beginner so it is an honor to guide you in your stock market journey to help you achieve financial success and Financial Freedom now let's begin so here is what we're going to cover in today's stock market for beginners video you are not expected to absorb all this information in one sitting so please subscribe and watch this peace meal at your own comfortable pace so let's begin with this you should invest into the stock market because it is a proven way to grow your wealth just look at the historical data these are the average annual returns that investors make in the stock markets in the past 30 years the stock market has gone up by an average of 99.9% a year if you look at the the past 50 years it's 10.8% a year in the past 100 years an average annual return of 10.5% a year but I'm going to tell you this because I want to be upfront with you yes there are stock market crashes but over time the stock market recovers and essentially the stock market keeps going up it's it's like home prices generally real estates tends to increase in value so you know this but I want to I want to make this clear so here are the median home prices in the past a 100 years ago a home cost this is the median price $3,200 50 years ago you could buy a home the median home for $33,000 30 years ago the median home price was $126,000 and today the median home costs approximately $400,000 so it just keeps going up and it's the same thing with the stock markets the reason why Financial assets such as Properties or stocks continue going up is partly because of inflation however the stock market does outpace inflation But ultimately you want to put your money to work by investing it and the stock market has a proven track record of growing your money now let's proceed it is essential that you understand how this stock market works I don't want you to throw your money in stocks into the stock market if you don't understand the basics so in this section let me explain to you what are stocks how to invest in stocks how people get Wealthy by investing in the stock market and what stocks are best for beginners so let's get started I want you to know that the stock market is very simple so let me explain to you what stocks really are so let's just say that you own a business and so you're a business owner and let's say that you want to raise a lot of money for your business to grow and expand so what do you need to do you need to find investors and a great place to find investors is in the stock market now in order for you to raise a lot of money for your company you need to sell a portion of your ownership in your company to investors and that's what stocks are stocks are just units of ownership in a company so if you buy stock in apple or Microsoft or Tesla you are an owner of the company so you probably own a very small piece of the company but you are still technically an owner therefore one person does not own apple or Microsoft or Tesla so there are thousands of people that own stock in those companies so those companies have thousands of owners which are the stockholders now let me tell you how to invest in stocks so the stock market is a big marketplace where you go to buy and sell stocks to participate in the the stock market you need an online brokerage account so there are a lot of online brokerage accounts to choose from I'm going to leave a link down below to some online brokerage accounts that are offering signup bonuses with zero fees and there's no catch it will cost you nothing and some of these signup bonuses they can be substantial so please be sure to check them out so you open up an account and then you transfer money from your bank account to your brokerage account and then you're going to have money in your brokerage account accounts and then you're going to be ready to buy stocks so you want to buy stocks in good companies that's because if a company does well then the value of the company increases if the value of the company increases then the price of your stock goes up and then many cases if a company is making a lot of profits the company will take those profits and pay a dividend to whoever owns the stock so you don't have to do anything to collect a dividend it just gets deposited into your accounts which is pretty awesome aome so this is passive income in its truest form now if you want to sell your stocks it's very easy so you may want to sell your stocks for whatever reason such as you just want to cash out maybe you don't like the company anymore maybe you want to sell your stock to have money to buy a different stock so you're free to do as you please and again this is all free no fees zero commissions so when you sell your stocks you'll have money in your brokerage accounts because again you your stocks and whenever you want you can transfer that money back to your bank accounts or you can let that money just sit there some brokerage accounts they'll pay you interest on the money sitting in your accounts or you can use that money to buy stocks you know whatever you want now I want you to know that many people get wealthy in the stock markets and there's not just one way to do it I'm going to tell you what most people do and you can try to see which style is most appealing to you bu Buy and Hold dividend investor Speculator Trader and let me explain these styles to you buy and hold some people just buy stocks and they just hold on to them for a very long time we're talking about years even decades some people they'll even hold on to their stocks until they die and they'll put it in their will so this is a set it and forget it approach Traders some people in the stock market will try to buy and sell buy and sell frequently and make some money so these people are known as Traders Traders are not interested in holding a stock for the long run and watching the company grow so I would recommend that beginners in the stock market so if you're a beginner please refrain from Trading with a large amount of money I would recommend that you get some practice in first but it's true many professionals get rich by trading but that comes with experience speculators some people buy smaller riskier stocks that have a lot of potential and could Skyrocket in price so these are speculators I'm not saying that in a good way or a bad way people speculated on Tesla early on and made a lot of money so you could say the same thing for Amazon or Walmart and so many other stocks but there's other people that speculated on stocks and lost a lot of money so if you're going to speculate don't invest too heavily in one stock and do not fall in love with a stock your emotions can Cloud your judgments dividend investors some people buy stocks primarily for the dividends many investors take their dividends and reinvest them to get more dividends and your wealth accumulates over time so this is a great way to build your passive income so you can actually set your accounts to reinvest your dividends automatically it's called a drip dividend reinvestment program I am personally a big fan of dividend investing because you literally get paid for doing nothing so if you're dividend investing your money is making you money so you should know from the get-go which style is most appealing to you and it could be more than one it could be a combination but there's no one right answer there's no one right method so whichever path you take you should understand the pros and cons of that method or that style now let me tell you what stocks I think are best for beginners there will be so many stocks to choose from small companies big companies companies in different sectors energy technology really estate retail banking Pharmaceuticals Etc there will be companies that Focus their sales in the US there will be multinational companies there just so many options I would suggest that as a stock market beginner you invest in bigger and more stable companies the reason why I'm saying this is because of risk and reward if you invest in a smaller non-name company there's a higher probability that you can lose a lot of money as a beginner you should get a feel for the stock market take it easy and just learn once you get more experience and knowledge then you can slowly move out of your comfort zone into stocks that offer more risk and reward if you don't want to take this advice and you want if you want to jump straight into risky stocks then I beg you please do so with a smaller amount of money please take my advice the stock market is not a get-rich quick scheme in the stock market you want to be an investor you do not want to be a gambler and I want to see you make money as a beginner it is better for you to make a little bit of money than to lose money so I would recommend sticking with safer stocks to start and learning little by little slow and steady wins the race and it's a marathon and just so you know if you want to be very safe and diversify then you can always buy index funds an index fund is a collection of stocks it's like a big basket of stocks where you get diversification so it's a way for you to buy a little of almost everything which decreases your risk now in the stock market you can choose how to invest your money so let me give you two options and you can decide which method that you prefer so option number one is that you can search for good stocks to buy this is known as stock picking so you're trying to pick the winners if you're going to stock pick then it's important that you spend time monitoring your stocks to ensure that everything is going well so later in this video I will teach you more about stock picking your option number two is index funds or ETFs so if you don't want to become a stock picker you can invest in index funds or ETFs in the stock market if you invest in an index fund or ETF in the stock market that's like buying a little bit of all the stocks in the stock market so there's pros and cons to this approach which I will tell you about right now so today I'm teaching you about Index Fund investing which includes includes what is an index fund the pros and cons index funds versus ETFs and how to invest in them so let's start with this what is an index an index is simply a grouping of stocks or bonds or other Securities so for example the S&P 500 is an index of the 500 largest publicly traded companies in the US so the thing is that you cannot invest directly in an index but you can invest in an Index Fund now let me explain to you how an index fund actually works so let's say that you have an index fund that tracks the S&P 500 so that Index Fund will buy shares of stock in all the companies in the S&P 500 therefore the index fund will mirror the performance of the S&P 500 if the S&P 500 goes up 1% then that Index Fund it will likewise go up 1% if the S&P 500 goes down down 1% then that Index Fund will go down 1% now I want you to think about that really think about what I just said because there's going to be pros and cons to this so let me tell you what they are and we'll start with the cons because the index funds will mirror the markets that means that if you invest in an index fund then you cannot outperform that Benchmark so for example if you invested in an S&P 500 Index Fund then you cannot beat the markets so if you want to become a superior inv instor an index fund may not be right for you another downside with index funds is the lack of flexibility so for example if there are some stocks that you don't like in the fund then unfortunately you're going to be stuck with them it's take it or leave it that means that if there are stocks that are underperforming in the index fund you can't cut your losses and you can't have them sold off and another drawback is the tracking error an index fund will not perfect perfectly track an index so if the S&P 500 goes up 7% the S&P 500 Index Fund it might go up 6.95% and you may be like Hey where's the rest well that difference it includes the cost to run the actual Index Fund so sometimes the tracking error may be tiny like a difference of 0.01% but with other index funds it may be much more but there also may be tracking errors if an index fund uses derivatives in those instances an index fund will not track precisely okay so we just got all the bad stuff out of the way but now let's talk about the good stuff because there are a lot of benefits with Index Fund investing so the great thing about an index fund is that you can be hands off you can become a passive investor and this is great for someone that's new in the stock market or inexperienced if you do know what you're doing you're just too busy let's just say that you don't have time to research search individual companies or you don't have the time to pay attention to macroeconomic conditions then this will solve the problem so I understand that we're all busy life gets in the way and this may be a good solution for a lot of people to become a passive investor with Index Fund investing so here's another benefits so the truth is that most people are not good at picking individual stocks if you're not paying attention to the economy if you're not staying current on the sector and if you can't read financial statements well that probably explains why so it's hard for even the professionals to beat the markets so research shows that from 2001 to 2016 active fund managers underperformed their Benchmark index so honestly if you put your money in an index fund then you're probably going to do better than most people I do want you to know this though because most people when they talk about index funds they overlook this part so recently passive investing through index funds it has been outperforming however active management generally outperforms passive investing when the stock market or an index is going down that's generally because active managers to capitalize better during the market recovery phase so in other words when the markets are going up an index fund tends to do better when the markets are going down active management tends to do better now another big benefit is diversification diversification is so important for your investing portfolio because it lowers your Risk Index Fund investing provides you with a Simple Solution that's because when you buy an index fund you're buying up a slice of up to hundreds or thousands of companies at once with div verification is going to balance your risk and your portfolio will experience less volatility now here's what I suggest to you I would say compare the pros and cons and see if see if this makes sense to you so to review the benefit benefits of investing in an index fund it include but are not limited to passive investing Dependable returns and diversification the drawbacks are you cannot outperform the lack of flexibility and tracking errors so I hope you enjoyed that educational information but I want to give you my I want to share with you my opinion as well so I'm going to speak freely this is like a heart tohe heart about Index Fund investing so if you're going to ask me for my opinion about Index Fund investing I believe that it depends on the investor it depends on the individual person but for most people for most investors I believe that Index Fund investing does make sense there are more benefits than there would be cons or negatives because just think about how practical it is think about how convenient it is you could just throw money into an index funds and you don't have to you don't even have to know what's going on you don't have to manage it you could just focus on your job your career your friends your family you could focus your Focus your energy and your attention elsewhere it's it'll be more stressfree you don't have to make these big decisions you don't have to keep up to date on the macroeconomic environment or company specific news so there's a lot of benefits that you have to take into consideration so sure the trade-off would be that you're not going to be the next Warren Buffet so you need to ask yourself those types of questions and be honest with yourself are you trying to be the next Warren buffets because if you are then index fund investing is probably not for you it's not a good fit for you not with the goals that you're trying to achieve but if you're trying to find a place where you can park your money excess cash as an investment and you could do it passively just check up on it passively in conveniently then index fund investing might be a really good fit for you but I do want to say as last part and this is especially important to beginners because when people are talking about index funds they usually think about a a very broad index let's just say that S&P 500 right however you can use index funds targeted index funds to complement yourself as an investor as an active investor so for example if I'm going to be actively participating in the stock market like I'm going to be looking at stocks every day and not necessarily buying or selling every day but um I'm staying up to dates as an active investor in the stock markets and I'm buying stocks in all different types of sectors but I feel like that I'm lacking exposure in let's just say pharmaceutical stocks okay if that's the case then I could I could use index funds a targeted Index Fund like that that specializes just in pharmaceutical stocks to complement My overall investing style and the other approach is that if you do want to park most of your money the majority of your money with a broad index let's just say an index fund an S&P 500 Index Fund right you can park the majority of your money in that vehicle the S&P 500 Index Fund however if you really have that itch to buy and sell individual stocks well you can have the majority of your money in a in a broad Index Fund like that a well Diversified Index Fund like that but then Additionally you could complement that by buying the stock picks that you like let's just say well you really think Tesla is going to do good or you really think Microsoft is going to do good then you could have the bulk of your money in an index fund and you could use smaller amounts of money to make your stock picks but it the bulk of your portfolio will revolve around Index Fund investing now let me answer some really good commonly asked questions about index funds are index funds popular the answer is yes index funds were introduced in 1976 investing in index funds is the most common form of passive investing it is estimated that passive investing in the stock market makes up about 15% of the market that's the official stat some estimates are that it's over 30% so yes it's very common very popular so this is nothing new another good question is how do you invest in index funds okay so it's very easy you will need a brokerage account or retirement accounts you pick the index that you want to track and then you buy shares of that Index Fund so it'll be very straightforward another very good question is how much money do you need to invest in index funds most index funds have no minimum requirements so it could be a great way to get started with very little money and I'll answer this last question how many index funds should you own so that's going to depend on how Diversified a particular Index Fund is if you invest in a well Diversified fund then you may only need to own one Index Fund or two index funds however if you invest in an index fund that's more targeted then you may need to own more than one or two in order to create diversification now it's very important that you understand this there is no one right way to invest in the stock markets you can successfully pick your own stocks invest in index funds invest in ETFs or a combination of these I recommend that you choose what is best for you and to make that determination it's important that you understand the differences between the three stock picking index funds and ETFs so personally in the stock market I do all three I invest in index funds I invest in ETFs and I pick my own stocks now in this section you will get a better understanding on whether one or two or all three are a good fit for you I'm going to answer for you how are index funds and ETFs similar how are they difference and how do you know which one is right for you okay so I'm going to tell you the truth the truth is that they have more in common than not they have more similarities than differences but I want you to be aware of the differences that could make an ETF or an index fund a deal breaker for you I want to I want to demonstrate to you what is going on with an index fund so you could think of it like this let's say that you me my brother your neighbor and my Uncle Bob we're all pooling money together and with this pool of money we're going to buy all the stocks in the S&P 500 let's just say we do that and let's just say that you want out when you want to cash out your portion the fund has to sell some of its Holdings to pay you out now let's compare this to an ETF so with an ETF an exchange traded fund you could think of it like this let's just say that you bought all the stocks in the S&P 500 and you packaged them all up into one bundle and you did that 10 times and I say to you hey can you sell me one of those and you're like yeah sure and I buy it from you so it's simply traded from you to me like a stock so I hope that helps to clarify what is going on an index fund is a collection of Securities that are financed by a pool of investors an ETF is a collection of Securities that are traded between investors so that's it that's the difference but there are a lot of similarities and let me tell you what those are both an index fund and ETF offer you a lowcost solution diversification and a proven track record so index funds and ETFs they're both passively managed this means that there's no human that is actively choosing what to invest in therefore index funds and ETFs are low cost they have a low expense ratio now both index funds and ETFs they will give you diversification because they hold a variety of assets and index funds and ETFs generally outperform active fund managers over a longer period of time now I want to tell you the differences and this will help you determine which one is better for you so the four biggest differences between an index fund and ETF are liquidity minimum investment requirements expenses and fees and Taxation so let's get started with liquidity you can buy and sell ETFs throughout the trading day like a stock with an index fund you can only buy or sell at the end of the day therefore an ETF is more liquid so this probably will not make a big difference for most long-term investors but it does matter if you're going to do any day trading or shorter duration moves now moving on to minimum investment requirements so generally an ETF will have a lower minimum investment requirement when you compare it to an index fund so for example you can buy as little as a single share of an ETF in some cases you can even buy fractional shares of an ETF but with some index funds they're going to impose a minimum requirement it could be $1,000 it could be $2,000 or even more now when it comes to expenses and fees both index funds and ETFs are lowcost investments that's because both are passively managed previously ETFs were known to carry lower expense ratios compared to index funds but that Gap has been closing and the expenses for index funds and ETFs are now quite similar so you're going to see expense ratios in the 0.05% to 0.02% range which is a fraction of 1% which is a very lowcost solution and of course we have to consider taxation ETFs are more tax efficient compared to index funds that's because of their structuring so I previously demonstrated to you how they're structured and that structuring it has tax consequences so essentially with an ETF you're selling to another buyer and the cash comes directly from that buyer to cash out of an index fund you have to redeem it from the fund manager and the fund manager will have to sell some of the Holdings to get the cash to pay you out so if there is a gain on the sale that gain is passed on to all investers of the fund that means that you can end up with a tax bill even if you don't sell a single share so ultimately assets are bought and sold every time an investor enters or leaves an index fund and anytime there's a capital gain every investor that's part of the fund will need to pay capital gains tax now I want to be very clear with you on this topic of Taxation because I don't want this to scare you so this is going to be in relation to how much money that you have in the index fund so if you have very little money in the fund then don't expect the tax consequences to be significant but if you do have a lot of money in the index fund then yes it could be a decent amount now let me give you my opinion on which one is better an index fund or an ETF but I want to tell you the story to help you understand the situation the whole situation so the index fund was created in 1975 by John Bogle who went by the name of Jack so Jack Bogle was the founder of the Vanguard group Bogle created the index fund in 1975 so that everyday investors could compete with the pros so that was 1975 it took a few years for Index Fund investing to catch on but eventually it gained traction so 18 years pass by it's 1993 State Street Global launches their S&P 500 ETF called the spdr is referred to as the spider but this wasn't the first ETF this was preceded by the Toronto ETF in 1990 among others but ultimately the ETF is an improvement of an index fund it's like an index fund 2.0 and that's why ETFs have been gaining in popularity very quickly 1993 the ETF Market basically didn't exist 2002 there are over 100 ETFs 2009 over 1,000 ETFs currently we're close to 10,000 and right now there's a competition for your money between index funds and ETFs now let me tell you what I think my opinion is that an ETF is an upgraded version of an index fund here's why if you're on a tighter budget an ETF may be better for you if you have less money to invest upfront so I'm referring to the higher minimum requirements so ETFs yes they do have a better tax structuring and that's going to give you a greater control of claiming gains or losses and because you can sell so you can buy or sell an ETF throughout the day so if that need need ever arose I'm guessing in most situations that it would not but if it ever did that you could take advantage of that situation of any major price movements throughout the day and that is a benefit that you cannot have or do with an index fund however some of these ETF advantages they might not make a meaningful difference to you especially if you're a long-term investor so I want to be clear that I do like index funds but if I had to choose then I would go with an ETF but that is just my opinion but if there's a if there's a particular index fund that does not have a competing ETF then yeah I would buy you know that Index Fund so that's just the way I see it so to be clear both index funds and ETFs have my stamp of approval however personally I like to pick my own stocks in addition to index funds and ETFs now if you want to pick your own stocks then it is essential that you understand the terminology and you know how to read stocks because if you don't understand the stock terms then you're going to be lost and you're not going to be able to distinguish good stocks from Bad stocks so let's begin with the essentials so in this next segment you're going to learn the key data and stats when you're researching a stock and it doesn't matter if you're looking at a stock screen on your app or brokerage accounts or a website so the information and terminology that I'm about to show you it's going to be the same no matter where you look so please follow along and make sure that you fully grasp this info because it'll be critical we're going to look at finance. yahoo.com so let's go over there once you arrive here at this top bar search bar right here that's where you're going to put in your ticker symbol that's your identifying letters of your stock so let's look at Ali bank so Alli bank is owned by Ali Financial so let's go there all y That's the ticker symbol as you can see right here we're going to select that what we're going to do in this tutorial is give you the basic overview of what we are seeing on this screen let's begin as of right now when we are reviewing Ali Financial ticker symbol Al l y the price is $18 and 43 cents a share the market is closed so this right here this will not be this will not be fluctuating because the market is closed if the market is open during that time you will see this fluctuating you know every few seconds if you refresh it it'll fluctuate during this day during during the during this trading day it went up 99 therefore it was up 5.68% that's a pretty big gain however markets are very volatile these days that's what you are reading After Hours the stock market has closed however the stock will still be trading after the market closes and also tomorrow pre-market that just means the stock will be trading before the Market opens the amount the quantity of how much of these stocks or these shares will be trading it's going to be very minimal compared to the shares of the stock that are traded on the market during the day so there's going to be in other words in layman's terms there's going to be a lot of buying and selling a lot of buying and selling buying and selling during the day and there's still going to be a little bit of buying and selling after after the market closes and before the Market opens currently it's after hours the next day tomorrow morning before the Market opens you'll see this say pre-markets so before before the Market opens let's go on to here this is the meat of the data what I've highlighted that's what we're going to be looking at closely today Li Financial closed at $18.43 the day prior the previous close of Ali Financial was $17.44 this morning today the stock price opened at $17.90 so yesterday it closed at $17.44 right here and then at today's open it just jumped open and started the day off at $17.90 so it was a good start it was a good morning for for Al Financial this is your beginnner tutorial so we are not going to cover what the bid and the ask are the bid in the ask just for your information this is more intermediate level is what people are willing to pay for it and ask is the price at which they are willing to sell it at a share but again for now if you're a beginner please ignore those the day range is the price fluctuation of the day during during the day during today's trading day it fluctuated from $741 all the way up to $18.55 the 52- we range that just shows you the price where the price of Ali Financial has been in the past year it has been as low as $10.23 and as high as $354 so you can see the current price the $18.43 you know it's not near the lowest and it's not near the highest point during the 52 we range the volume volume is very important this shows how many shares of Ali Financial has traded this day this shows that 6,994 221 shares have traded today if you see a stock with a volume that's very low that means that you can get trapped in that stock because you wouldn't be able to sell it so if you see a stock with a volume close to zero that should be a red flag and that should be problematic because even if the stock went up and you wanted to sell it you probably couldn't get rid of it however if I'm looking at Ally Financial and I see that the volume is nearly 7 million shares and one share is $18.43 that means it's very liquid in other words in layman's terms that just means that it's very easy for you to buy a share of Ali and it's very easy for you to sell a share of Ali because nearly 7 million shares trade hands each day well that was today the average volume is how many shares of this stock trade on average per day so as you can see today's volume was slightly less than the average however I mean that's that's very easy for you to sell your position and get out very quickly because a lot of shares are trading each day moving up here market cap it's going to say 6.87 7B that means the company the market cap cap means market capitalization which means the value of the company the value of the company is how many shares there are of that company multiplied by the price per share so how many shares there are times the price per share will give you the market cap which means the value of the company 6.87 7B just means the market cap or the company's value is valued at 6.87 billion if you saw this as an M instead of a b then that would mean 6.87 s million but this is a b so the market cap the value of the company is 6. 6.87 s billion beta this is an intermediate level terminology or item so please ignore this for the time being this is PE ratio is a price to earnings ratio this is more intermediate level as as well this just means the price of the stock divided by how much in earnings each share of this stock means again this is more for intermediate level analysis this we're just going over the very Basics during this tutorial however that's PE ratio and we'll cover that you know we look on this very heavily in the intermediate level so we'll be covering this very thoroughly earnings per share this is this is intermediate level stuff too this just means how much a net income the company makes divided by how many shares there are so it's the earnings the earnings per share the earnings dates this is the expected dates where the company will release their quarterly earnings so it is expected today's date is June 1st and we are expecting the earnings to be released between July 16th through July 20th there's forward dividend and yield this just means the dividend that a company is paying so Ali Financial is paying a dividend yield of 4.14% not all stocks not all companies pay dividends Ali Financial is one example of a company or a stock that pays a dividend this just means that if you bought $100 worth of Ally Financial stock then you would receive in dividends a rate of 4.14% so if you bought $100 worth of Ali Financial stock you would receive in dividends $414 approximately X dividend date this just means the date that that you need to be this is more of an intermediate level thing because this is representative of the date that you need to have been in the stock for the dividends for you to receive the dividends this is one-ear Target estimate this is honestly you should do your own research and your own homework don't rely on other people's targets or estimates especially from a generic site like a Yahoo finance all this other stuff is this concrete data this is but these things where their opinions or estimates I wouldn't rely on a site like Yahoo or Google or just any generic again this is just opinion so do your own research and again this is not beginner level stuff but we'll make videos on those topics here you're going to see the news regarding the company this is particularly important if there's large price fluctuations in the stock then you can see why the stock moved up so much or why the stock moved down so much so you can check your news here watch out for the ads though and it just goes on and on clickbait right here that is the new section and this this section is very important too of course this is the chart 1 D that just means the one day chart this is the price movement of Ali Financial during the one day the X access axis am I saying that right Y axis x axis it just sounds funny okay this is showing the time of the day and this is the y- axis is showing the price you can switch the time frame to 5 days to see how the price fluctuates 1 m is 1 month 6m is 6 months see you see the price has dropped considerably from February 18th febru February 14th down to the second or third week of March I would see the news during that time frame to see what the heck happened what triggered this was it overblown was it Justified or was it or do you think that it can go down more so I would check the news to see what happened during this time frame that's why it's good to look at the charts as well YTD just means year to date so this will start January 1st January 2nd was the first trading day of the year up until today one y is the onee charts it was pretty stable and then I just took a real big dive early February five wise 5year chart click on the max it'll take you back as far as it goes you can do a full screen approach wow that's one heck of a dive look at that that went down really fast we'll go back hit the back button over here you're going to see some features here that are locked like the company Outlook I think you got to pay for you got to freemium huh it's not worth it probably not worth it you got the charts we were just there I would ignore the conversations let's see what this is all about don't trust anybody on the conversations on Yahoo's message board that just don't just trust me statistics this is your more intermediate analysis so we'll ignore that for now you have the historical price closings what the stock price PR was on a particular day if you wanted to be if you're interested in a particular day or from a a set time frame the profile will just give you a little bit more information about the company some nice paydays give you the executives titles pay I really like to look at the who the executive team is because the leadership is key and you can do your background or your research on these people give you the size of the company sector industry the website and all the basic information more info here okay this one's probably one of the more important segments the financials here you can look at the income statement the balance sheet and the cash flow statements so you can see how they are financially if you look at the income sheet again we'll do a separate video about reviewing the income sheet and the balance sheet and the cash flow statements I'm sorry to be going all over the place let's go back to income statement and relax here for a bit generally high level overview you can see the history this is their oneyear figure onee figures from 2016 2017 2018 2019 so this is comparative each line each row is a comparative analysis compared to the previous year and what I would do again this is very high level overview just see if their total sales are growing which is their total revenue see if their total profits are growing or decreasing which is their net income so that's how you would just look at their Financial Health from a fa from a very high level overview and then you can do the same thing from their balance sheets you know you can see their assets their liabilities are their assets growing are their liabilities growing just see the the health of their company and you can do the same thing with the cash flow statements on the analysis tab again don't trust these people I mean they're like these analysts are like weather weathermen it's just like weather reporters where they just get it wrong all the time just don't listen to this do your own research number of analysts just look at this this is just nonsense this is just nonsense we won't get into options again that's more advanced holders well this is more intermediate stuff that a beginner probably would not need to know this is just showing you the top in who is holding the shares of this stock people want to know this stuff to see if there's smart money which is you know big institutions or big BigTime investors that are shareholders because usually that's a signal of a vote of a vote of confidence in that particular company depending on who the investor or who the institutional holder is and this is I mean you don't need to this is this is not practical information sustainability so that is the typical information that you're going to see when you look up a stock in addition it's very important that you know the common stock market terms that you'll hear very often so in this segment I want to explain to you 10 Common terms that every beginner in the stock market should know so I'm going to teach you the lingo and some key Concepts starting off with number one is a bull market when the stock market is going up people call it a bull markets that's because a bull thrust its horns in an upward Motion in a bull market there's going to be ups and downs along the way but the general direction of a bull market is up a bull market can last for a few months or for many years the average bull market lasts for 3 to 4 years during a bull market most investors are making money that's because on average stocks gain 110% during a bull market a bull market is good times and that's why people love it everyday investors enjoy watching their account values go up and it's a great time all around a bull market can be triggered by various factors such as a booming economy or quantita easing number two is quantitative easing also abbreviated as QE this is when the Federal Reserve is printing money which causes inflation when you have high inflation most things will go up in price including stocks in the stock markets so stock prices tend to go up during quantitative easing that's just because there's simply more money in the economy all that newly printed money it needs to go somewhere and a lot of that money Finds Its way into into the stock market driving up the price of stocks number three is a bare markets when the stock market is going down people call it a be markets that's because a bear swipes its claws in a downward motion people use the term bar Market when the stock market has fallen at least 20% from its peak the average bare Market lasts for 9 months on average you can expect the stock market to Fall by 36% therefore you can understand why most investors do not enjoy a bare market number four shorting when the stock market is going down not everyone is going to be sad though because in the stock market you can make money by betting that stocks will fall in price in the stock market most investors make money by buying a stock at a low price and then selling it at a higher price you buy low and you sell High however you can switch the order around you can sell high and then Buy Low low you're doing the same thing just in the reverse order therefore when you're shorting a stock you're hoping that the stock goes down in price if you want to make money shorting a stock then you should be searching for companies that have a very bad future ahead of them this could be bad management a dying industry a product or service that was just a fad too much debt competitors that are out competing them Etc when you're looking to short a stock you want to make sure that they're as bad as they come the more terrible the better number five quantitative tightening we spoke about how quantitative easing is money printing quantitative tightening is the very opposite of that when the federal reserve prints money that's quantitative easing when the Federal Reserve takes that money back that's quantitative tightening quantitative tightening tends to be harmful to the stock markets if the Federal Reserve is pulling money out of the economy there's going to be less money to go go around if there's less money to go around there's going to be less money in the stock markets this means that the price of stocks will generally go down so it's pretty straightforward quantitative easing pushes the stock market up quantitative tightening pushes the stock market down at number six we have dead cat bounce when the stock market is going down it's not going to go straight down it's going to go up and down up and down but the general direction is downward in this downward Trend you may see stocks bounce in price only to fall down even further a lot of amateur investors lose money in a deadcat bounce because they think that a stock has reached a bottom at this point they see the stock price going back up and they fomo they have the fear of missing out however that was not the bottom and this bounce will be shortlived this bounce in price it's something that always happens because nothing will ever go straight down it's like a law of physics in the stock markets even stocks that announce that they're going bankrupt will have a dead cat bounce they call it a dead cat bounce because when a cat jumps out of a tall structure let's just say a tree the cat hits the pavement it dies on impact it still bounces up because of physics Newton's third law of motion but the dead cat that bounced up it's coming right back down when a stock is going down it may bounce back up investors may think that the stock is coming back to life and it's going to shoot back up but no it's going right back down that's a dead cat bounce number seven don't fight the fed the federal reserve's monetary policy is a big factor on whether the stock market goes up or down If the Fed prints money it pushes the stock market up If the Fed takes that money back it pushes the stock market down of course it depends on how much money they're printing or taking back the bigger the quantity the bigger the impact the federal reserve's decisions have a big influence on the direction of the stock market the Federal Reserve can have more of an impact on the stock market than the health of the economy this was clearly evidence in 2020 during 2020 the economy locked down unemployment skyrocketed and GDP fell however the Federal Reserve printed an excessive amount of money and has sent the stock market up 18% so that's how powerful the federal reserve's influence is on the stock market therefore you don't fight the FED Number Eight dollar cost averaging you'll see investors abbreviating this as DCA when you buy a stock you never want to go all in so let's just say that a stock is at $10 and you think it's a good price don't act like a crazy person and use all of your money to buy it at 10 even if you think it's a good price so sure you can buy some at 10 but save some money in case it drops to nine and save some money in case it drops to eight by doing so you'll be averaging down on your purchase price in this example let's just say that you thought it was a good price at $10 and let's say that nothing is fundamentally changed with the stock and on no news the stock Falls to $9 so this would be a great opportunity to DCA dollar cost average down and buy more shares at a cheaper price a benefit of dollar cost averaging is if you buy some at 10 and then it goes up then you'll make money if the stock goes down then you can buy more shares at a cheaper price and this will allow you to make even more money because you got in at a better price number nine tax loss harvesting this is when you're selling your losing stocks taking the loss so that you pay less taxes so let's say that you bought and sold a bunch of stocks during the year and you're up $5,000 in that case case congratulations on your success however you're going to face taxes however if you're holding on to some stocks that went down in value you can sell them at a loss so your total gains are reduced by tax loss harvesting you end up paying less in taxes number 10 support and resistance these are very important terms that you're going to hear often a lot of people in the stock market like to look at the stock charts and identify patterns if there's a certain price that a stock has a hard time falling below that's called the support if there's a certain price that a stock has a hard time going above that's called the resistance in a lot of cases when the support is broken it will turn into the new resistance and a lot of times when the resistance is broken it will turn into the new support now let me tell you how to find good stocks to buy so it's a simple two-step process step one is Discovery so how do you even find companies that are listed on the stock market and step two is your evaluation so that's researching whether a stock is a good buy or not so let's talk about step number one which is finding stocks first you have to find out which companies are listed on the stock market right so how do you do that and the answer is simple there are multiple ways so here's one way there are many free websites that list all the companies that are on the stock markets and you can filter your search for which stocks that you want to look at based on the size of the company the price of the stock by industry stocks that are trending up stocks that are trending down how popular stock is ETC so that's one method another method is that you can find Stocks by reading financial news outlets so we're talking about Wall Street Journal Google finance Yahoo finance Etc another method is that you can subscribe to free newsletters about stock picking there are subscription services for stock picking you can always ask your friends your family members or co-workers now step number two which is very important is doing your research do your due diligence before investing your hard-earned money into a stock because your money's on the line you want to make sure that you do your homework to maximize your odds that you pick a winner if you get stock recommendations from a newsletter a subscription service a friend a family member or co-worker it doesn't matter where it comes from always do your own research and I want to tell you this there is no one right way to evaluate a stock some investors will pay more attention to sales growth others to profits or dividends price the earnings ratio cash flow the charts Etc your evaluation will most likely Encompass a variety of these factors so everyone has their own style of stock picking now let me give you my honest opinion about where you should buy and sell stocks so a brokerage account is where you buy and sell stocks and the majority of brokerage accounts have zero commissions so that means that it costs you nothing to buy a stock or to sell a stock so they don't charge you anything it's literally free that's because these brokerages have other ways of making money they make money from lending from interest from Market making so they make money in a lot of ways not limited to just those so they don't even bother charging you a commission to buy or sell stocks so the question is which brokerage accounts is the best where should you open up a stock market account my honest answer is they're all the same now of course there's going to be exceptions like if you're a professional day trader but but for the vast majority of investors it doesn't matter if you have a million dollar or $100 any name brand brokerage accounts will be good so I'm going to leave a link for you down below of a good brokerage account that I use personally if you use that link then you'll receive a signup bonus of free stocks to Kickstart your accounts now moving on to stock market taxes this is very important for two reasons so the first reason is well you don't want to get in trouble at the IRS and the second reason is that you want to minimize your taxes on your stock market gains so I'm going to teach you what you have to do with the money that you make in the stock markets money that you lose in the stock markets your dividend income your interest income and how to reduce your taxes in the stock markets if you have more advanced questions or if you just need clarification on what we covered today then please write them in the comments down below and I will do my best to help you out so let's start with the basics in the stock market your taxes will be based off the calendar year so we're talking about January 1st to December 31st your brokerage account will keep track of all your activity for the year and this is going to include gains losses interest dividends Etc now I want you to be prepared so I want to give you a timeline of the events so that you don't miss any important tax deadlines or documents so let's say that it's December 31st it's the last day of the year and then the day ends and then the year just ended so happy New Year it's now January 1st and your brokerage account has until February 15th to give you a tax document that you need to report on your tax return this tax document is called the Consolidated 1099 the Consolidated 1099 will include the 1099 B which states how much money that you made or lost in the stack Market that that year the 1099 int and that states how much interest income that you earned that year in your brokerage account and the 1099 div which states how much dividend income that you earned that year in your brokerage accounts now you would think that in this day and age everything is computerized right so why can't your brokerage accounts immediately generate your tax documents on January 1st like what's up with that so that's a good question but there's actually a good reason why it cannot be done that quickly it's because even though your tax period ends on December 31st there are certain types of stock transactions that can retroactively affect your taxes so for example let's say that the year 2023 ended and it's January 22nd of 2024 so with certain transactions what you do in January can affect your taxes in the previous year one example is the wash sale rule that's why brokerage accounts cannot immediately generate your tax documents on January 1st so you're most likely going to get your 1099 tax document in early to mid February which should be enough time for you to finish your tax return by the April due date so that's an overview of how this all works now let's go over the most common situations in the stock market you will only pay taxes if you make money if you lose money in the stock market then you will not pay taxes so as a matter of fact if you lose money in the stock market then you will receive a tax deduction now let me give you an example to clarify so let's just say that you buy Tesla stock for $100 in January of 2023 and let's say that you sell it one month later in February of 2023 for $120 so congratulations you made a gain of $20 you sold the stock for 120 but you will not pay taxes on the full sales price of $120 you will only pay taxes on your $20 of gain so how much will you pay in taxes that's going to depend on which tax brackets that you're in and that depends on how much money that you make overall if you're in the 10% tax bracket then your $20 of gain will be taxed at a rate of 10% which means that you will owe the IRS $2 you made a gain of $20 you need to pay $2 of taxes to the IRS so you came out ahead by $18 now here's what you must know to save yourself a lot in taxes if you hold a stock for one year or less and then you sell it for a gain then you will pay regular tax rates this is called short-term capital gains so it's just based on how long you hold the stock one year or less is classified as shortterm so if you're in the 10% tax bracket and you make money in the stock market then you will pay a tax rate of 10% on your short-term capital gains if you're in the 37% tax brackets and you make money in the stock market then you will pay a tax rate of 37% on your short-term capital gains but if you hold the stock for more more than one year and then you sell it for a gain then it will be classified as a long-term capital gain so it just depends on how long you hold a stock shortterm is a year or less longterm is longer than a year so long-term capital gains receive much better tax rates and it doesn't matter which tax bracket that you're in your tax treatment will be much better regardless it is a GameChanger so let me explain if if you make a lot of money at your job and you're in the 37% tax brackets your long-term capital gains will be taxed around 20% if you're in the 25% tax bracket your long-term capital gains will be taxed at 15% if you're in the 10% tax bracket your long-term capital gains will be taxed at a rate of 0% so that's right 0% if you don't believe me you can look up 0% long-term capital gains tax therefore regardless of whichever tax rate that you're in long-term capital gains will receive favorable tax treatment so keep that in mind this is going to save you a lot of money especially if you're sitting on a big winner and this leads to another important point that you must know you only trigger a tax consequence when you close your position so let me explain so let's just say that you bought Microsoft stock in the year 2020 for $100 by the end of the year by the end of 2020 the stock goes up from $100 to 130 but you didn't sell it you're just holding on to it because you did not sell the stock and you did not close your position you did not trigger a tax liability and let's say that it's next year so now we're in 2021 and 2021 ends and Microsoft went up to $150 so congratulations but you just held the stock you still didn't sell it then it's going to be the same thing you did not sell your stock you did not realize the gain which means that a tax consequence has not been triggered so still there's nothing to report on your tax return and you don't have to pay any taxes yet because you haven't sold a position you have not closed your position and then let's say that we're now in the year 2022 and you finally decide to sell the stock for $180 now I'll tell you two things one your gain is $80 you sell the Microsoft stock for $180 you bought it for 100 so your gain is 80 and you will be taxed on your $80 of gain the second thing is that your tax rates will be much better because remember you held on to the stock for longer than one year and this makes it a long-term capital gain and long-term capital gains receive much better tax rates now let's talk about losing money in the stock market because it happens when you make money in the stock market you have to pay taxes when you lose money in the stock market the IRS gives you a tax deduction and a tax deduction allows you to pay less taxes which is a good thing so let's be clear losing money in the stock market is bad try not to do that but if you lose money at least you get a tax deduction when life throws Lemons at you you make lemonade so use this to keep a positive attitude towards losing money in the stock market at least you get a tax break so let's run through three examples of you losing money in the stock markets so example number one you work a job and at your job you make $100,000 of taxable income so congrats you make six figures you have all this extra money and you're like I'm gonna invest some money in the stock markets and you buy $2,000 of pelaton stock and your investment declines from $2,000 to 1,000 in the same year and you don't sell it by the end of the year you just keep holding on to the stock hoping that it recovers you know what the tax consequence is there is none because remember you didn't sell the stock you did not close your position so you did not realize your loss therefore there is no tax Consequence the tax implications will be triggered in the year that you sell the stock for a G gain or for a loss example number two it's going to be the same setup you make $100,000 at your job you buy $2,000 worth of pelaton stock it declines to $1,000 and you can't take it anymore the stock is just stressing you out and you end up selling it the same year for a $1,000 loss in this scenario you realize the loss of $11,000 but hey you have to look at the bright side you get a $11,000 tax deduction so on your tax return you make $100,000 a taxable income at your job but now you get a $1,000 stock market loss to reduce your total taxable income so on your tax return your taxable income goes from $100,000 to 99,000 so hey you save some money on your taxes and example number three same setup you make $100,000 of income at your job and let's say that you bought $20,000 a pelaton stock like you went overboard like you YOLO and let's just say that the stock fell in value from $20,000 to 10,000 you know that sucks but it happens and you sold the stock and you lost $110,000 okay so here's what happens so there's a rule that limits your losses per year you can only use a maximum of $3,000 of losses per year as a tax deduction so if you lost $10,000 this year you can take a $3,000 tax deduction this year and then your tax return would look like this taxable wage income $100,000 Capital losses 3,000 taxable income 97,000 and then you would have unused losses of $7,000 so the $7,000 of remaining losses would carry forward into the future so don't don't worry even though you can't use all of your losses as a tax deduction this year you can use them in future years so you don't lose your losses they carry forward and if you don't use all your losses next year then the losses just keep carrying forward until you're able to claim them all in full now I have to clarify this this is so important do not be confused if you lost $10,000 on pelaton stock but you made $10,000 on Walmart stock then you can use the entire $10,000 loss from pelaton to offset the $10,000 Walmart gain so they net together the $3,000 limitation is when you lost money in the stock market overall and $3,000 is the maximum tax deduction that you can claim to lower your other taxable income such as taxable income that you made at your job a clarify if you made a gain of $10,000 on Walmart stock but you lost $115,000 on pelaton stock that means that you lost $5,000 in the stock markets and then you can use $3,000 of that as a tax deduction to reduce your wage income so you lost $5,000 in the stock market overall you can use $3,000 as a tax deduction that year and then your $2,000 of remaining losses will carry forward to next year now let's cover your tax obligation on your dividend income and your interest income so this is very easy but I don't want you to overlook this so remember around early February you should receive your tax document from your brokerage accounts this tax form is called the Consolidated 1099 and this will tell you how much money that you made from interest and dividends for the tax year that just ended and you have to report this information on your tax tax return but it's very easy to do that if you're filing your tax return yourself with a do-it-yourself software then you just simply look at your 1099 tax form and then type into the software the figures that your software needs but in today's modern society many tax software allow you to directly connect to your brokerage account and the software will automatically retrieve the relevant tax information that your tax return needs and just for your information you may have interest income in your stock market accounts because you may be earning interest on money that you're not using within your accounts if you get paid interest it's listed on your 1099 tax documents and you you have to report on your tax return but that's very straightforward to do your interest income will be taxed at your regular tax rates you will not receive any special treatments on your interest income and here's a little extra information on dividends so some of your stocks May May pay dividends it's listed on your 1099 tax document and you report it on your tax return some of your dividends may be taxed at your regular rates and these are called Ordinary dividends some of your dividends may be taxed at lower rates and these are called qualified dividends so it just depends on the classification of the dividends so we're not going to get into that today on your 1099 tax document it will separately list out your qualified dividends but long story short be on the lookout for your 1099 tax document by mid-February use that information for your tax software if you're self-preparing your return if you're using an accountant give them the Consolidated 1099 tax documents if you do not report your 1099 activity it will most likely result in an IRS letter unless your activity is extremely minimal again this was a beginner's guide to taxes in the stock markets if you have intermediates or Advanced questions please ask them in the comments down below I intentionally did not go into the details of estimated tax payments Equity options Commodities foreign tax credits Etc so I don't want to scare beginners because those issues will not be applicable to most people and I want to clarify this if you invest in stocks or index funds or ETFs or mutual funds in a retirement accounts there are no tax consequences until you take that money out of your retirement accounts so if you buy or sell within a retirement account those are non- taxable transactions and they will not be reported on your tax return I hope you learned something and enjoyed this video thank you so much for the support Please Subscribe and I wish you a very nice day happy investing
