last updated August 3rd, 2021

A stock is ownership in a specific company. When you purchase a company’s stock, you own a tiny fraction of that company. 

What does that mean? 

Imagine you have money to invest, $100,000. Now let’s imagine you take all of that money and invest it in a mom and pop restaurant down the street from your home. If they do well, you do well, because you own part of that company. Now if this was your only investment and they do not do well, you could potentially lose a portion of your money if you. If you were diversified and owned portions of multiple businesses, you could potentially minimize your risk.

Why do companies sell their own stock?

It’s an easy way for them to raise capital for business ventures, it’s as though they auction off a percentage of ownership in their company at the market value.

What is stock day trading and can I make money off of it?

Stock day trading is the idea that you can make money purchasing undervalued stock and quickly sell it for a profit. A few things I’d like to point out:

• If you’re trying to find a get rich quick scheme, you’ve missed a couple of steps.
• Those that day trade stocks 1) have a lot of money to spare and 2) know what they’re doing.
• You’re more likely to lose money via commissions and bad trades than to earn any type of profit.
• The short term gains on day trading stock are highway robbery via Uncle Sam and are rarely worth it unless you’re making more money than you know how to spend.
• It takes a lot of studying and monitoring, as well as constant evaluations to be half decent at purchasing undervalued stock
• If you’ve seen undervalued stock on the news, it’s too late.

Can I add stock to my investment portfolio?

Sure you can. As an advisor, I allow my clients 10% of their portfolio to be used for individual stock as play money if they’d like. However, more often than not, as we’re trying to build a portfolio into triple digits, it makes more sense to hold off on individual stock purchases as it tends to lead to less “buy and hold” strategies and creates a transactional portfolio. The majority of my clients have a mix between mutual funds and ETFs, as well some individual stock for those that request it.