The number one most important thing we learned last class
was the two ways the stock market gives profit. Those two ways are 1) Share price increases and 2) Dividend
payouts. When share prices
increase, your stock is worth more money, so you can sell that stock for a
higher price than you originally bought it for. So for those who bought stock from Apple when the company
was just starting spent very little cash on the stock. Now an Apple share costs around $700,
so if you held onto the stock you would make hundreds of dollars per share. What most Americans do unfortunately is
buy the stock when it’s already high and successful, so there isn’t much room
for the stock to go but down.
I
was a little confused on dividends during the class period so I decided to ask
my dad about them. He told me that
the way dividends work is that the company decides whether or not to use some
of their profits to give back to their stockholders. Every company has a board of directors, of which the
stockholders vote on, and the directors decide whether or not to give out
dividends. Most companies do give
out dividends. Stockholders can
either use these dividends to buy more stock or to keep for themselves. My father’s company receives dividends
from their stock, but instead of using it to buy more stock they use it on
current expenses.
This is a link to Home Depot’s stocks over the past ten
years. As you can see, the stocks
are at it’s highest right now in 2012.
This would be a good time to sell!
However, it might be a good time to buy too because the stocks could
continue to rise. The stock market
is a gamble; just remember to follow your head, not your heart.
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