Flirting with Stocks: Stock Market Investing for Beginners by Anil Lamba

PART1
STOCK MARKET BASICS

Chapter 1
How to Invest in Stocks

How toInvest inStocks
Let me start at the very beginning for the benefit of those of you
who have never invested before.
There are two ways to invest in shares: through the primary
market and the secondary market. The first involves purchasing
shares straight from the company when it makes a public issue
and the second when shares are purchased from existing
holders.
When a company raises money for the first time by issuing
shares (or bonds), it does so in the primary capital market
through an Initial Public Offering (IPO). Subsequent public issues
by companies already listed on the exchange are called Follow-

on Public Offers (FPOs). If one does not purchase at the time of
the Public Issue, or is not allotted shares because the issue is
over-subscribed, the other option is to buy in the secondary
market from the existing owners of these shares.
Stock exchanges facilitate secondary market investing and
trading. Markets, such as the New York Stock Exchange (NYSE),
the NASDAQ Stock Market, the London Stock Exchange (LSE), the
Tokyo Stock Exchange (TYO), the Bombay Stock Exchange (BSE),
or the Singapore Exchange Ltd (SGX), are secondary markets.
What is the difference between a stock market and
other markets?
Which other markets do we know of? The textile market, the
vegetable market, the fish market and so on. What’s the
difference between these markets and the stock market?

Flirting with Stocks: Stock Market Investing for Beginners by Anil Lamba