Chapter 8

Getting Your Slice of Capitalism with Stocks

IN THIS CHAPTER

Understanding what a stock is

Making money in stocks

Choosing among stock buying methods

Is it true that only the rich get richer and that to get ahead, you have to know the right people?

I’ve never been a fan of the class warfare that too often permeates our political discourse. One reason for my distaste is the simple fact that the facts are on the side of capitalism’s being the best system to allow folks of all different means to better their lives and enjoy a good standard of living.

Consider the opportunity to share in the upside presented by owning a stake in successful businesses. That’s exactly what you’re doing when you buy shares of stock, either through funds or directly through a stock exchange.

You don’t need big bucks or the right connections or inside information to earn handsome long-term returns in stocks. (Trading on true inside information can land you in legal hot water.) You simply need to read and digest the time-tested principles I present in this chapter.

I explain what stocks are, how you can make money with them, and the pros and cons of the various methods for purchasing them. I also detail how to time your purchases and sales, and how to sidestep disasters and maximize your chances for success.

What Are Stocks?

Entrepreneurs start companies, and at some point in that process, perhaps even many years after the company was initially formed, company founders may sell shares of ownership ...

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