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Originally Posted by Tiberium Wolf
Can anyone tell me how the stock market works? A company put like X shares for sale. Other ppl buy it. Who get's the money? Having share % gives u what? Is buying cheap and selling high the only way to get money?
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The very basics of it is that a company makes shares available. This is "stock in the company" - it's nothing physical, but represents ownership of the company. The money is somewhat a form of venture capital, and the money goes directly to the company. I believe every quarter or so, some companies provide payouts to their shareholders. It's generally a very small amount - a few cents (if not a fraction of a cent) per share. This differs between companies, I believe.
Shareholders don't make their money off of the payouts, in general. Instead, they buy stock in the company and then wait. When the company is performing well, the market speculation drives the prices of the stock higher - that is, there's a greater demand/interest in the company. People can then sell the stock that they own and make a profit. On the other hand, owning stock in a company that fails, or selling stock at a lower price than you bought it for, will result in a monetary loss.