The Beginners Guide to the Stockmarket
Welcome, fellow Neopian! I imagine you stumbled here because you are interested in the Stock Market, or have heard some of the wonderful stories of other Neopians becoming rich from investing, or maybe you are just interested in obtaining the Stock Market Avatar? Well, fear not, your curiosity shall be well rewarded with Stock Market Knowledge. Sit back, relax, and enjoy the abundance of knowledge.
Why You Should Invest
Before I begin explaining the stock market in full, it is important to know why the stock market is important in the world of Neopia, and more importantly, why you should be interested in using it daily.
Imagine this scenario: You just spun the Wheel of Excitement and won 20,000 Neopoints! How exciting! Rather than spending your new riches, you decide to place your Neopoints in the bank so that you can earn interest on the amount. If you are a fortunate Neopian and have reached the highest rate of interest of Ultimate Riches! you will be making 12% a year off the amount you just put in the bank. What does this mean? Well off the 20,000 NP you just put in, in the course of a year you would make 2,400 NP simply by having your Neopoints reside in the bank during this time.
2,400 NP may seem like a wonderful turnaround, and believe me, it is swell to be making NP by doing nothing, but what if I told you there is a better way to earn Neopoints by simply putting your Neopoints into a safe place? Today is your lucky day my friend because this "better place" does exist and it is called the Stock Market.
What is a Stock
If this is your first time looking into investing in the Neopian Stock Market, things may seem a little confusing or even unfamiliar. Don't be dismayed, before long you will be investing like a pro!
What is a stock? A stock (also referred to as a share) is a small portion of a company. When you purchase a stock you are purchasing the rights to the win's and losses of the particular company. Though, before you get too excited, the portion of the company you are purchasing is extremely small, but still, this small amount can produce a huge return.
Why would owning part of a company be a good thing for you? When the company is doing well, or selling more of their product, they are bringing in more profit, and therefore the company has a higher value. When the company's value rises, so does the value of the stock you own!
Understanding the Terminology
There are many acronyms and foreign words used in the Stock Market, so understanding them is key to your success. Though, fret not, once you understand them, remembering their meaning is easy!
Portfolio: This is a compilation of all your stocks. You can the status of your stocks and their values all in one snazzy place.
Icon: This is the spiffy image at the front of each stock. This image represents the company in which you are potentially purchasing stock from.
Ticker: These are acronyms which represent the name of the company. In example "TNAH" stands for The Neopian Auction House
Volume: This is the amount of stock which has been purchased and sold in the given day.
Opening Price: This is the Neopoint value of each individual stock when the market opens on each given day. These prices are noted at 12:00 AM Neopian Central Time.
Current Price: This is the price of the stock as you view it in real time. This price reflects the amount you would pay to purchase the stock, or the price you would receive in selling the stock. These prices fluctuate throughout the day.
Change: This is the direct change in the opening price and the current price. For instance, if the opening price was 15 Neopoints, and the current price is 17 Neopoints, the change would be +2, meaning that it increased 2 Neopoints.
The "change" in your stocks is indicated in one of three colors, red, black, or green. Red reflects a decline or negative change, black represents no change, and green reflects a positive change or growth in the value of your stock.
QTY: This represents how many shares of an individual stock you have.
Paid: In case you forgot, this is the value you paid for your specific quantity of stock.
Market Value: This is the overall value of the stocks you have. If you were to sell it right then, the value noted here is the value you would receive for selling all of the give stock.
% Change: This percentage reflects directly upon how much your stocks have changed. This value is color coded like the "change" term.
Now that you understand what you are seeing when viewing stock, there are a few important rules you must consider when purchasing stock:
Each Neopian can purchase a maximum of 1000 shares each day.
Stocks cannot be purchased if they are under 15 Neopoints. Therefore the absolute lowest price you can purchase stocks for is 15 Neopoints.
Finally Let's Purchase Some Stock!
Now that you understand the terminology and the rules, you can purchase your stock! To do so, simply go to the "buy" section of the Stock Market. There will be two sections you need to decide before you can submit your purchase.
Which company do you want to buy stock in? In this section you input the ticker of the company you would like to purchase stock from. If you are unsure of which company, simply view the list of companies! You can directly select the ticker of the company to have it filled in as your selection.
How much stock would you like to buy? As noted earlier, you can only purchase a maximum of 1,000 shares per day. Therefor you can select any amount from 1 to 1000 to purchase.
Once both selections are filled, simply submit your purchase and as easy as that you have purchased your stock! This new stock, along with any other stock you have previously purchased can now be seen in your Portfolio. One nifty feature of your Portfolio is that now you can view a summary of all your stock. In addition to your individual stock values, you will see your overall stock value. This will show how much Neopoints you have spent for all the stocks you currently own, the value of all your owned stocks, and their overall percent of change! Do not be dismayed if this overall value is lower than your original purchase value. While this does technically refer to your overall success at the given time, it averages the values of all your stock.
Selling Your Stock
When it comes time that you would like to sell your stock, simply view your portfolio. (I highly recommend that you NEVER sell your stock when it is worth less than you paid for it.)
Beside the individual stock icon is a small arrow, select this and a drop down menu is provided. Here you can select how much of your stock you would like to sell. You can sell some, or all of it if you wish! Your stock will be listed in intervals of your purchases.
Simply input the amount you would like to sell, and as simple as that, your the value of the stock you just sold is added to your Neopoints on hand. Though, be warned, each time you sell stock, Nigel the stockbroker will charge a handling fee of 20 NP. Fortunately, Nigel isn't a devious businessman and no matter the value or quantity of the stock you sell, the amount he charges will always remain 20 NP.
Now that you know how to buy and sell your stock, it is pivotal that you set some goals for your process. The best way I can advise to earn without fail is to set guidelines for yourself.
As stated above the best way to get the most out of your Neopoints is to only purchase stocks when they are 15 Neopoints. I set a goal so purchase the max amount of stocks (which is 1000 shares) per day. This equates to 15,000 Neopoints per day. For some, this amount may not be practical, so adjust this number to fit your personal needs.
In addition I try to buy as many different companies stock to include in my portfolio, this allows me the greatest chance for diversity and in turn, rising stocks.
When I sell my stocks, I have a target price in mind. I wait until my stocks have reached a minimum of 45 Neopoints in value, meaning they have risen 200%, before I sell them. I feel this is the peak of most stocks before they begin to lose value once more. Set a target price for yourself so it is not too tempting to sell your stocks before they have reached their potential!
For instance, I recently had 200,000 NP invested with Chia Steel Holdings (CHIA), throughout the day I noticed my stocks were nearing a 200% increase. I was very tempted to sell when they hit 170%, but since my goal is to only sell at 200%, I waited. Sometimes this can prove to be a bad idea as the stock may fall once more. This time, though, it continued to rise, and once it hit 200% I sold all my shares. The new value of these shares was 600,000 Neopoints. Nigel took his 20 NP for the sale so I was left with 599,980 NP. When I subtract the price I originally paid for those stocks (200,000 NP) I was left with a 399,980 NP profit!
As stated above, for this guide to work, you should NEVER sell your stock if it is valued lower than the price you paid for it. This is why diversifying your portfolio is pivotal. Sometimes you may need to use the Neopoints you have invested, when you absolutely have to sell prematurely you then have the choice to sell the stocks which are in the positive so no loss is taken.
There now is a snazzy Avatar associated with the stock market. If you follow the rules of this guide, and purchase your maximum amount of stocks daily, this avatar is easy to obtain over time.
Conclusion and Disclaimer
My specific goals and target price may not be fit for everyone, and I in no way take claim for your successes or failures in the Stock Market. Values will fluctuate greatly. There have been times I didn't sell my stock, because my goal was set high, and I missed out on an opportunity to make profit, and there have been times that I sold my stock because it hit my goal value, and the stock continued to rise after I sold it all, so I potentially could have made more from the investment. It is a give and take, but if you stick to your plans and only sell when your stocks are "in the green" you will never come out losing. It is very rare for the companies to go bankrupt. A company has not hit bankrupt since since Year Six (2004).
Please note that I provided my specific goals only as an example of one success story. There is no perfect goal, and it differs from person to person.
The ultimate tool to have for anyone who is interested in investing in the Stock Market is patience. You will see fluctuations in the worth of your stocks; simply be patient and wait for their value to rise and you will be pleased with the results!
I hope this guide has provided some enlightenment on the stock market! No go start investing!