Hey guys, I was wondering if anyone could give me a crash course in stocks.

Not trying to be a dick, but do some research/googling on your own and then ask questions (after researching those questions first).

Read recommended books in order on sticky.

Buy low, sell high

A stock is a uniform piece of ownership in a business. Stocks come in two types: common and preferred. Common stock is what is mostly traded in the stock market. Shareholders of common stock have a vote in major decisions for the business, and their voice is equivalent to how many shares they own. Preferred stock has a superior claim to the business's assets and earnings compared to common stock. Preferred stock has a senior claim to common stock for dividends and will receive previously owed dividends before the common stock shareholders do. In return, preferred stock typically doesn't have voting rights on business issues. In a sense, preferred stock is like a hybrid between common stock and a bond. Subsequent discussion focuses on common stock.

The reason for owning stock in a company is to have that partial ownership in the company. Ownership can be summed up thusly: you own all of the excess earnings and assets of the business after paying everyone else (such as suppliers, employees, debt holders, and the government) first. Upside as an owner is much greater, but downside is also greater if there are no excess earnings and assets. So when buying a stock, you have a claim for a share of the company’s assets in excess of its liabilities and a claim for a share of the current and future net income. If these are zero or negative, you have the right to nothing. In that case, either you are purchasing stock because you think earnings will become positive someday, or you are making a bad investment decision.

To start making money with stocks, the simplest way is to purchase shares of a mutual fund or exchange traded fund, typically an index fund. These funds require little research on the part of the purchaser – just purchase one that tracks something you want and has acceptable fees. You’ll receive a return matching the results of the fund’s holdings minus the fees. Vanguard is highly touted here because its funds often have the lowest fees.

If you want a better return on your money than a fund’s or index’s average return, you are free to purchase individual stocks, different funds, and stock derivatives (which I won’t cover) to make up your portfolio. You can also short these securities, which means you sell the securities and have to buy them back later, hopefully at a lower price, and pocket the difference. By doing so, you are giving up the average market return to receive a superior return, but you may also underperform the market average.

Some argue that it is not possible to consistently outperform the market. Typically, those who argue this point are academic economists or index investing proponents. And while they are technically true in that the market can keep producing returns long after you are gone, over your investing/trading period, you can outperform the market. A bell curve has two sides – one for above average, and one for below average. Index investors fall upon the middle of the bell curve, and anyone who tries to invest on their own can end up anywhere on the bell curve, for better or worse.

To outperform the market in one or two years over a large time span can be attributed to luck. Consistent outperformance of the market requires a competitive advantage, something unique that puts you in a favorable position (competitive advantage is typically discussed about businesses, not investors, but it definitely does apply). Value investing is the competitive advantage of some, such as Benjamin Graham (the father of value investing) and Warren Buffett. Another well-known competitive advantage is George Soros’ General Theory of Reflexivity, which is used by George Soros and Stanley Druckenmiller, for example. Other competitive advantages can be found, such as using the Piotroski F-Score. If you want to follow or create a competitive advantage, consider reading up on Warren Buffett and Charlie Munger, Benjamin Graham and David Dodd, Phil Fisher, Peter Lynch, Howard Marks, George Soros, Stanley Druckenmiller, and so on. This list is certainly not exhaustive.

People choose to create a competitive advantage through what makes sense for them. Some people focus only on one particular company at a time (micro investing), while some focus on national and/or global economies in general (macro investing). People also vary in their analysis, which typically falls into two types: fundamental and technical. Fundamental is all about the tangible facts of a business or economy, such earnings per share and operating cash flows or GDP growth rates. Technical analysis ignores tangible qualities of a business or economy and focuses on data and statistics about traded securities. Technical analysis involves technical indicators that use data such as trading volume and averages to determine potential entry points to buy or sell a security, fund, or derivative. My personal opinion is that technical indicators work in the absence of (new) fundamental information.

For fundamental analysis, you will want at least a basic understanding of accounting to understand a company’s financial statements, which can be found on the SEC website using Edgar; you’ll also need to do significant research on companies. A good understanding of economics is necessary if you wish to pursue macro investing. For technical analysis, you’ll need to understand how to read charts, understand how certain technical indicators work, and you’ll have to figure out which ones you wish to use. You’ll also want to understand psychology of the market and yourself to make better trading decisions. Neither paths are easy, and both require significant time and energy. Even then, you may not produce superior returns, in which case you will need to change your philosophy.

Resources you’ll want to look into include Investopedia, the SEC's Edgar, and books of successful investors and traders. Many of those books you can find in pdf format with a quick Google search (tip: only click on links with [pdf] in the title to actually get these books; do not use links without [pdf] that say pdf download because you may get malware). For example, here is The Intelligent Investor. Good luck!

UGAZ
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On a similar note, don't ask for help on a message board, buy some books and read them. Do your own research.

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October 19, 1987

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October 29, 1929

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On a similar note, don't ask for help on a message board,

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nothing wrong with him bouncing ideas off other investors here. The problem is people have put a lot of time into help threads here, many of which are in the sticky. The sticky is there for a reason.

nintendo stocks

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I'd say that paper trading

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especially if he ever wants to learn how to trade futures.