Trading 101: What is the Stock Market?

all right I got two thin pizza crusts I think that's make it on your own I got a mexican-style all right let's see oh I got another Mexican style my wife knows I like those got a pepperoni I got a supreme what the heck does this have to do with the stock market well it's pretty much what the stock market is let me explain now if you're a longtime viewer of the channel then you clearly know what the stock market is to give a little context I'm a former youth group leader at my church and you know just over the years I've had you know that age range say hey you should talk about a stock mark you know what what is it and just kind of do a video on that that would be a cool video and it's taking me this long so this is definitely intended for just the people that have no idea what the stock market is maybe you were doing some homework right now for school and yeah you can use this analogy that I'm about to use that's perfectly fine but I just want to talk about what is a stock market from a very simplistic view for those of you that out there that are maybe wondering and hey if I can inspire you to want to maybe learn more that's cool too but the stock market is essentially all about pizzas and in fact we're not going to call up the stock market anymore we're going to call it the pizza market the stock market is made up of just a whole bunch of pizzas so in our case we're going to just use three pizzas so for the pizzas that we have we'll have pepperoni mmm that sounds good a bacon and then an orange meaning you put some orange slices on it we'll get to that in a little bit within the world of the stock market these pizzas are actually called companies so when you just stop them but what are some companies out there well Microsoft McDonald's Lowe's Home Depot you know think of clothing brands American Eagle Abercrombie and Fitch can you tell what generation I'm from those are anyways so you have lots of just different companies out there but we're not going to call them companies we're going to call them pizzas and these companies get involved in the stock market for a single reason they want to raise more money they want to make money they want to get money however you can look at that but these companies that the technical term is go public these companies that want to get out there in the public in the stock market they want money they want to get money so by going public they open themselves up to offering pieces of themselves offering slices of themselves to everybody so this pepperoni pizzas go public what they're going to do is divide up their company so they're going to slice this up like a piece of pizza and they're going to open that up to anybody you or I you know just if you think if you're a big fan of pepperoni pizza then you can now get a piece of this company or in our example a piece of this pizza so let's just say that you know what I do want a piece so I'm gonna I would like that piece right there now remember like I said the whole point of going public is so that these companies can make money so how are they going to make money by giving you a slice of their company or a slice of their pizza they're going to what they're going to charge you money right that's all we're going to make money so let's say they charge you a dollar 50 so they give you a slice but in the world of the stockmarket a slice is actually called a share you now own a share of this company or you own a slice of this pizza and you paid a dollar 50 for that slice or in if you want to sound cool with your friends like you know the sock market say yeah I paid a buck 50 for that share and that's exactly what it is you are now a partial owner of that company you've paid and you own a piece of the pizza let's go over here bacon you may be thinking ah bacon yeah I know there's like bacon and sausage but just just bacon I I can see I mean I can see how it could work but it's still kind of out there a little bit because usually you have bacon and other stuff on it you know like a meat lovers type deals yeah I can see it so bacon now wants to go you know public and they want to make some money so once again they're going on you know slice up their company so that they can sell different slices to people so once again you like you know I I do I want a piece of that bacon one it's it's a little bit more speculative though cuz I see how it could work out and I see you know it's got some potential it's still a little bit goofy because just bacon so for that maybe you only have to pay 75 cents why is the price going down well it's a little kind of goofy so because it's a little bit more goofy I mean hopefully we can all greet pepperoni that's just like that's about it I mean if here's that name of pizza my guess would be one for you two pepperonis gonna be here so pepperoni that's kind of a safe thing I mean yeah pepperoni everybody's heard of that so that's why they can sell their pieces for a dollar 50 because well it's it's pepperoni this one if they want to get money raise money remember that's why they go public yeah people are probably gonna be willing because hey you know what yeah I'll give it a try but bacon so they're only going to be able to get 75 cents per slice but again remember slice means what a share so again just to reiterate the reason that they cannot get as much for their share of the company there's slice of pizzas Bacon's a little kind of on the edge you know it's a little bit more risk here because they're pushing the limits a little bit but let's just take this a little bit further and talk about the orange slice pizza so now the orange slice pizza they want to get some money they want to get out there and try to you know make some money so they're once again gonna divide this all up and in this situation you're probably thinking when I first said that orange orange what that sounds terrible yeah it doesn't really sound that good but you know what they got an idea their theory is that putting orange slices on your pizza is going to be the next revolutionary thing but still right now when I go public that seems that seems kind of speculative this seems kind of really wild cutting-edge that could go either way so if you're going to buy a piece of orange pizza if you're going to get a share of that company hopefully you're saying I am not willing to pay that much because that sounds really risky is orange slices on your pizza actually going to turn into something like really good like is a bunch of people gonna fall in love with that I mean pepperoni tried-and-true that's proven no need to you know even argue about it bacon yeah I could see some debate I know you got to have more than just bacon but something is I thought that bacon sounds good to me so there's but orange slices so if people want to get a you know some of this action I mean you're probably looking at I don't know 10 cents a slice but remember a slice is actually a share why is it so cheap well as we've been discussing that's a super risky investment to be making if you are investing in a company that wants to put orange slices on pizza I'm not saying it can't work but it's definitely gonna be more risky so they're just not going to be able to get as much for that because people aren't going to find as much value in this sort of concept but at its core this is what the stock market is it's companies pizzas that then slice themselves up and offer slices on themselves but again those are called shares so they're off a share of their company which means each one of these people are now a partial owner of the company now obviously it cost a lot more to become an owner of this pizza or pepperoni a little bit less to become an owner of the bacon and then pretty much dirt cheap to become an owner and this orange slice pizza so now how do you actually make money in the market you know this is kind of the dynamic of how you can get involved how the companies are broken down and what allows you to you know participate but how can you actually make money well let's say and there's many different aspects here but let's just say no there's lots of food channels out there so this orange slice company gets on these food channels and you know there's all these famous chefs out you know Gordon Ramsay and I guess that's really only chef I know but there's a bunch of really famous chefs that they take a bite of that orange slice pizza oh this is the greatest thing ever how did you do it I never thought that orange slices would go together perfectly with pizza and they gave it rave reviews and then you're watching TV and breaking news special report orange slice pizza is the greatest thing since sliced bread and everybody's talking how great this is every I mean it's all over the place talking about how great orange slice pizza is now you're saying hey you know what I want a piece of that company I want to go buy a slice do you think that the slice is still going to be for sale for ten cents when everybody's talking about how great it is heck no the value on this thing just skyrocketed and in fact now let's say after all the hoopla and press and all that stuff now if you want to buy a slice of that you got to pay $2 again wait a second how did it how did that price per share how did this price per slice go up so much well again when these people first bought it was very that seems weird but now that everybody says it's great and you have all these great reviews that's going to increase the value of it so if you want to get a piece then you can but you can still get a piece you can get a slice of the action but now you're going to be paying $2 so how do you make money well for the people that bought at 10 since they maybe say you know yeah I'm willing to sell you my slice of the pizza that I bought for ten cents but I'm going to sell it to you for two dollars that's a pretty good gain to buy something for ten cents and then to sell it for two dollars that's that's a good deal now within the world the actual stock market this can equate to millions upon millions of dollars and this would be what we'd call a great trade you know a great investment let's look at another example let's say that you know you got pepperoni pizza and you know people bought for a dollar fifty but then all of a sudden you know John Hopkins Medical University you know Harvard University Princeton University all these Medical Center's release a study and the study says pepperoni is the worst thing for you or is like just terrible in fact every bit of pepperoni that you eat decreases your life by six months but just it's all verifiable that's what all the sudden comes out and is just like a fact now what do you think is going to happen to a price of pepperoni do you think you can still go and buy a price or a piece of pepperoni for a dollar fifty heck no you think you could buy for a dollar remember if we just every piece of pepperoni decreases your life by six months what is going to happen to this slice that some people may have bought for a dollar fifty well that is bad news for something like that's come out you could probably go pick up a piece of pepperoni trying to let's just say 25 cents why did it go down in value well like we just discussed that was not good news that's it here are those bad health effects that it would have on you so in the world of you know stocks we would say wow that stock just dropped in value so these people you know that bought right here for a dollar fifty now if I want to sell they can sell but they can only sell it for 25 cents so in other words that was a pretty bad investment that was a pretty bad trade they are losing money on this investment because you know the news for pepperoni not so good whereas you know orange whoever thought orange slice piece was the next great thing and now those people are making lots of money but that is how the stock market works different events different thoughts different opinions all sorts of outside dynamics are going to fluctuate the amount that these slices of the pizza are worth or shares of each company is worth some of them you can have control over others may just come out of left field like you know pizza or the pepperoni thing all of a sudden wait pepperoni is bad for you you know and sometimes it can come out of left field sometimes you can kind of see it coming but that is how it all works a stock market is just a bunch of companies a bunch of pizzas in order for these companies to make money they're willing to sell off slices of their company so I realize this is a very bare-bones you know kind of analogy of how the market works but that that's all it is it's companies want to make money so they're going to offer shares of themselves to the public and then you can go and buy them and at that point you are known as an investor because you are investing in that company because you think that company is going to be going up I mean if you think that orange slice pizza is going to be the next greatest thing then yeah you would want to buy a slice if you think that pepperoni pizza is just a good safe kind of thing and you just want to you know play it more so on the less risky side then yeah pepperoni would probably be a good choice to pick but that's all it is the market is just the pizza market bunch of pizzas out there all these pizzas are sliced up and if you want to participate you can go buy a slice or share of that company and at that point you would be what is known as an investor in that company or thin and our analogy you'd be an investor within that pizza so if there are any other questions you know definitely leave those down below I'm all for helping especially the younger people you know learn if they're interested in the stock market or whatever so if maybe I didn't cover something or there's you know an aspect that I kind of left out definitely leave those in the comment section below I'd love to help you out and just get you a better understanding of what the market is from very simplistic very basic perspective and I plan on doing more videos like this you know as time goes on just basic concepts and that way you know hopefully it can just help out some of the younger people out there in terms of understanding what exactly all that lingo means out there when you know maybe watching news in here about the stock market this stock market that so as always if you found this helpful click that like button definitely leave comments questions below I'd be more than happy to help you out

Channel: ClayTrader

Views: 976,075

Rating: 4.9335079 out of 5

Keywords: Stock Market, Stock Market Learn, Stock Market What Is, Stock Market Beginner, Stock market How To, Stock Market Get Started, Stock Market Options, Stock Market Technical Analysis, Stock Market CHarts, Stock Market Shares

Id: ixF_wB2uvOs

Length: 15min 21sec (921 seconds)

Published: Thu Aug 18 2016