CHAPTER 1

INTRODUCTION:

What is stock exchange?

Stock Exchange is an exchange where security trading is conducted by professional stock brokers to achieve a profitable goal.

Stock Exchange can also be referred to as a licensed platform, building or an organization that trades stocks of companies for money and vice versa.

A stock exchange, also known as a securities exchange, is a highly regulated marketplace where various types of securities are bought, sold, and traded. These securities can include:

TYPES OF SECURITIES:

1. Stocks (Equities): This represents ownership in a company, giving shareholders a claim on a portion of its assets and profits.

2. Bonds: This is known as debt securities issued by companies or governments to raise capital, offering regular interest payments and return of the principal money invested.

3. Derivatives: This is the financial instruments that derive their value from underlying assets, such as options, futures, and swaps.

HOW STOCK EXCHANGES WORK:

1. By Listing: Companies list their shares on a stock exchange by meeting specific requirements and paying fees.

2. By Trading: Investors buy and sell shares through stock brokers, who act as intermediaries between the investor and the exchange.

3. By Price Discovery: Share prices are determined by supply and demand, with prices rising when there are more buyers than sellers and falling when there are more sellers than buyers.

4. By Clearing and Settlement: Trades are cleared and settled through a central counterparty, ensuring that transactions are completed efficiently and securely.

BENEFITS OF STOCK EXCHANGES:

1. Capital Formation: Companies can raise capital by issuing shares to the public.

2. Liquidity: Investors can easily buy and sell shares, providing liquidity to the market.

3. Price Transparency: Share prices are publicly available, allowing investors to make informed decisions.

4. Regulatory Oversight: Stock exchanges are regulated by government agencies, providing a level of protection for investors.

EXAMPLES OF STOCK EXCHANGES:

1. New York Stock Exchange (NYSE): This is one of the largest and most well-known stock exchanges in the world.

2. NASDAQ (National Association of Securities Dealers Automated Quotations): This is a technology-focused stock exchange known for its electronic trading platform.

NASDAQ is a global electronic stock market and one of the largest stock exchanges in the world. It's known for its electronic trading platform and is home to many technology and growth companies, including Apple, Amazon, and Google.

3. Nigerian Stock Exchange (NSE): This is the primary and secondary stock exchange in Nigeria, providing a platform for companies to raise capital and investors to trade securities.

KEY PLAYERS IN STOCK EXCHANGE

1.The Stock Brokers or Brokerages: This serves as “Intermediaries” between investors and the stock exchange, providing trading services and advice, more especially to investors.

2. Investment Banks: These are financial institutions that help companies to list their stocks on the stock exchange market to raise capital or funds for their business.

3. Regulatory Bodies: These are government agencies responsible for overseeing and regulating stock exchanges.

INVESTMENT VERSUS BUSINESS

Investment: This is the act of putting money into assets or ventures for financial returns, with a passive role. Here investors focuses on financial gain.

Business: This is the act of creating and managing a company or venture, with an active role, focusing on products, services, and customers.

Here now, you need to understand that Business and investment are two different things altogether.

Business is a game of skills, you can decide to buy some items and resell them to make a profit and you can grow your business gradually as well.

This means you're actively involved in always doing something to accelerate your business journey.

Business requires your activeness, you have to keep doing something to keep your business active.

You can as well employ somebody to help you oversee or take care of your business.

You must continue doing something to grow and enhance your business.But investment on the other hand is different.

WHAT IS INVESTMENT?

Investment refers to the placement of your capital to the market for a certain business enterprise, in expectation of deriving income or profit from its use or its appreciation.

So, Investment is the act of laying out your money or capital in an enterprise with the expectation of profit.

Here you are not really doing any work, your money is working for you.

Your activeness is not really really required.

Investment takes time to yield return, it's not quick or instant money.

Many people have reduced investment to ponzi, they simply want to put their 60k somewhere and wake up to billions (I believe you're not one of them?).

It never works that way, if it is investment, it needs time to yield or time for it to appreciate, for example; You can decide to buy land somewhere and as soon as development hits the area you bought the land, the value of your land will appreciate immediately.

You can decide to buy gold and resell it as its value appreciates.

One thing you should know is that sometimes, investment is not too fast to yield. Though, under probability, it might not or might take longer time to manifest or yield profit, so you don't have to start thinking that it takes a longer time to yield profit.

TYPES OF INVESTMENT

1. STOCK EXCHANGE

2. REAL ESTATE

3. BUYING OF GOLD

4. FOREX TRADING

The main reason for this course is “Stock Exchange”.

WHY STOCK EXCHANGE?

The reason why we look up to stock exchange is;

YOU CAN START LITTLE CAPITAL.

YOU CAN MONITOR YOUR STOCK PROGRESS WITH YOUR SMART PHONE.

IT HAS MINIMAL RISK.

AND NO PRIOR KNOWLEDGE IS NEEDED.

1. Stock exchange requires a small amount of capital to start up with.

So when we talk about investment, there are some that require a small amount of capital to start it up or get started with it.

The situation of things now is alarming more especially in Nigeria, the economy is gradually going down.

People can't even afford a 3 square meal, let alone to have extra huge cash or capital to invest with.

So if you tell these kinds of people to buy land or buy gold, how do they gather the money to invest? Whereas; they make little or no profit in their business or maybe 🤔 they're being paid a small amount of salary to feed themselves, of which after feeding, they have no money remaining to invest into buying of lands and golds. Perhaps there's still money 💰🤑 remaining for them after feeding, it will definitely be little, so they can't purchase land with it or buy gold with it.

And that is why we are digging deep into “Stock Exchange” today.

Stock exchange is an investment where you can start up with little or small amount of capital, but you can buy more and more stock as you get more money or capital.

If you're in this class now, your urgent ₦1k, ₦2k or even 1$ can assist you in buying some stock or to start the stock investment.

2. Another reason is that you can monitor or track your investment with your phone, and that's the best part of this stock exchange investment.

These days technology is getting advanced, so your investment can be monitored with your P.C or your smartphone.

Through your smartphone, you can see the stock to buy, you can see if it's appreciating or depreciating, you can monitor the progress of your stock, as well as you can buy at any time and you can sell at any time.

3. Another reason or another important thing you should note is that “NO PRIOR KNOWLEDGE IS NEEDED” and that's why you're taking this course, because you want to get the primary to secondary knowledge on how to start your investment.

Whether you know anything about stock exchange before or you don't know anything concerning it at all, it doesn't matter. You don't need to worry about anything at all, since you're here to learn the basics of how to do it.

4. The risk is definitely considered minimal.

The reason why the risk is minimal is because, you've access to the stock, you have access to see how it is being done ✅. So you can easily monitor the growth with your phone and at the comfort zone of any place you are.

WHAT IS STOCK?

A stock is the capital raised by a corporation through the issue of shares, entitling shareholders to an ownership interest (equity).

Or you can say that it's the capital raised by a company through the issue of shares. The total of shares held by an individual shareholder.

A stock is a unit/piece of ownership in a company. Stock is the same thing as share or equity.

Having a stock in a company makes you part of the owner or shareholder of that company.

Imagine being a shareholder in some of the world's biggest companies like; Apple, Google, Coca cola, etc. Isn't it wonderful?

Buying a stock from a company means partnering with the company to achieve a goal and at the end of the sale, you make your own profit.

It also means ownership or holding a unit from a company.

Stock is the same thing as share like I said earlier, it's also the same thing as equity.

Stocks are sold in unit and buying it makes you part of shareholders in a company,

And you don't even need much money to become a shareholder.

Companies can approach the public for money by publicly publishing their shares for sale.

The first time a company offers its shares to the public is called ”IPO” (Initial Public Offering/Offer).

When you give them money, in exchange; you will be given units/Fractions of the company's shares.

This makes you a shareholder in the company.

WHAT IS STOCK MARKET?

Stock Market can be referred to as a licensed exchange platform, where security trading is normally conducted by some professional stock brokers.

Stock Market also refers to a market for the trading of company stocks.

Stock market is a network of stock exchanges where investors buy and sell shares of publicly traded companies.

That is, companies that have listed themselves on the stock market that they want to sell the shares of their companies, you can actually buy from them, since it's legit. Just like you go to market and buy things from the market from people that are ready to sell.

Stock market is also a network of stock exchanges where investors like you and me purchase those shares which allows the company to raise money from the public to grow their business or expand their company.

All you do here is to enter the market, select the companies that you would want to buy units/shares from, then buy their units or shares. Now when the value of the stock appreciates or something like that, you can actually sell off your shares. You can make your sells at any given time and you can also buy shares at any period of time if the value depreciates.

You can buy small today, tomorrow you buy more, and you can decide to sell off a little of your shares the upper day.

So investors like you and me can purchase shares from companies, and what it does is that the money we made use of to purchase those shares will help in growing or establishing the company that we bought shares from, so that they can make much more profit and then give us our own share.

So this is so different from a ponzi scheme. Your investment is used for growing and expanding the company, and the returns are what they share among us.

HOW DOES IT WORK?

We have 2 types of stock market;

The Primary Market, and

The Secondary Market.

In order for you to understand how this stock exchange works, you need to understand that we have two types of market.

That's the “Primary Market” and the “Secondary Market”.

Primary Market: The primary market is when or where shares are created for the first time, and then the companies list their shares through an “IPO” (Initial Public Offering).

An IPO is the very first time that a company first list their shares on the stock market (that is, to the public).

Remember that an “IPO” is when a company first lists their shares to the public which is known as “initial public offering”.

I see the primary stage as the point where the company is still starting up and then shares their business idea with others or with the public who puts in their money to build the company.

“But most of the companies we have now are no longer on primary market again, I mean; it's no longer their first time of listing their company's stock to the public, so they are not on primary market any more, most of them are now on secondary market”.

Secondary Market: The secondary market is essentially the stock exchange, this is where the supply and demand of shares are bought, sold and traded everyday.

This is where it can be bought by you and me, because the majority of the market is not on primary market again.

This is a stage where we, the masses, can put our own urgent ₦2K to business or to work.

So majority of the companies are not on primary listing again!!! Some millionaires that heard about it earlier have bought them all.

We can buy ours from a secondary listing, from any company at all, and we can sell at any time!!.

👉 If you want to read more pages of this book or learn how to start buying shares online, you can contact me through this number: +2348147280284.

@GOODY’S DIGITALS CARES.

THANK YOU!