Christopher Best – How to Make Money in the Stock Market

Christopher Best is a graduate student at Florida International University pursuing a degree in finance.

Some people believe that investing in the stock market is similar to gambling in a casino. Casinos structure their layouts and their games in such a way that most of the patrons lose money. This is not the case with the stock market. History proves that investing in the stock market and investing for the long-term is a winning strategy because the market appreciates over the years.

Christopher Best

When you invest in the stock market, you can gain profit in two ways. The first one is getting dividends. Many companies pay dividends to their shareholders independently of the stock price. Stock price appreciation is the second way to make money in the stock market. You make money when the stock rises above the price that you have originally paid for it. However, this profit stays on paper until you sell the stock. Selling a stock at a higher price is also called realizing a capital gain. Obviously, stock price can also fall below what you originally purchased it for.

The stock market is quite efficient. A price of a stock of a certain company shows how many people think that it’s a fair price. This is why is it not realistic to hope to create a system that lets you buy low and sell high. While some experienced professional investors can identify great times to buy and sell, doing so on a regular basis is impossible. The simplest and most guaranteed way to make money in the stock market is to build a large diversified portfolio that includes shares of large and small companies from a variety of industries. Examples and simulations of different portfolios are what finance students like Christopher Best have to study to earn their degrees.

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