Can someone explain investing to me using lamen's expressions or some sensitive of metaphor?
I understand that you put money contained by and hope to get more money out, but how does that work? Thanks.Answers: Investing can cart any number of forms be it investing in the stock open market, in solid estate, in interest-bearing accounts, or even within your education (ex: going to college). For your quiz, I'll assume you are referring to the investment of money (you can also invest time, etc).
When you invest money, you are placing it in a "vehicle" near the hope of earning more money. Essentially investing is trading risk for potential profit. Take a look at the following examples:
Investing surrounded by real estate: You remuneration $200,000 to buy a house and hope to sell the house for a sophisticated price later. If you deal in the house for $220,000 the next year after you have earn a 10% return on your investment since you gained $20,000.
Investing surrounded by stocks: You buy shares of stock of Apple Computer. Each share represents a very tiny portion of the company. If Apple sell alot of iPods and get richer, after you get richer too. So, if you bought Apple stock at $100/share and sold it at $150/share after you made $50/share or 50% on your investment.
Investing in interest-bearing accounts: If you hold a savings rationalization at your bank, they typically compensate interest which is a fee for letting them use your money. So if you enjoy $1000 in your article, at the end of 1 year you could enjoy $1050 in your statement. The $50 extra is interest that they paid you for using your money.
Keep surrounded by mind that all investments hold different levels of risk and different level of reward. For example, stocks are usually risky so you have the potential to earn plentifully of money but also lose a lot of money. Interest-bearning accounts are smaller quantity risky, but you won't be able to earn as much money or lose as much money as within stocks.
The short answer:
A company needs to take some cash to buy investigational computers.
Instead of borrowing the money, they decide to print out unmarked shares of stock. That's called an IPO (initial public offering)
The owners of the stock very soon share in the fortunes of the company. Company make money, company pays dividends to the shareholders.
Some of the shareholders decide they don't want the stock any more. They can market it to others, for what both sides believe is a fair price.
When you hold thousands of companies and millions of shareholders all buying and selling shares of stock, that's Wall Street.
If I buy stock today, and consequently next week the company announces that it made 50% more surrounded by profits than anyone expected, my stock is going to be worth more than what anyone thought it was worth closing week. It jumps within price.
What is going on with Citigroup today??
Answers: Just announced another blood bath to the tune of 9 billion loss for the quarter, dividend cut, and equity dilution. Gosh, what a great company.
They're controlling more wealth then most countries do, and using it to benefit from the US domination of Iraq, tax evasion, fraud, etc. Same as every other day.
When a ample company resembling Citigroup have huge writedowns, how does that affect their invesments within stock?
If I am a large company resembling Citigroup and I write down 24 billion in losses from subprime mortgage business, or I utter that I do, where do I receive the cast to hold on to my business running? Do I have to go my stock in companies resembling Mosaic and Dry Shipping, and Monsanto and Apple and Rimm to get some operating bread?Answers: The fundamentals look bad for Citi. The writedowns will hurt the profits for months to come. Layoffs is the first time to occur to cut cost. Also closure of offices will go on. This will help shed some operating expense but Citi will still own a lose.
Issuing new shares will most similar to not occur because it is largely used for growing the company, ie buy new buildings, exotic furniture and computers. Since, they want to down size this will not occur.
I'm a shareholder surrounded by Citi.
Basically, they got topical capital from private possessions investment firms and the middle east. Also, they've cut their dividend and are cutting the workforce. Finally, they are discussion about selling bad some business units to generate some dosh, but they've not mentioned selling out of specific investments contained by other companies.