We always hear people take pride in stock investing. However, there are a lot of untold bad stories. An example would be a broker tipping an investor about a particular "hot" stock. As the tip breeds rumors and speculation around town, the investor gets fixated with the fantasy that this stock will sky rocket and earn him millions. He then pours all his funds including his retirement plan and his house mortgage to this "hot" stock. A few years later, you meet this same man, in the subway, looking like a kid whose candy was snatched away. Not a pretty story.

Investing in stocks should not be made based solely on stock tips - especially rumors and speculation. Even news and reports should be scrutinized before using it as a basis of an investment. Otherwise, the investor is merely throwing a dice on the table and can easily lose money.

(Continued from part 1)

When corporations have financial needs to expand their business without resorting to borrowings, they have an option of listing in a stock exchange. This means that they sell shares representing ownership of their company to the public in exchange for cash. The funds generated will then be used for business expansion. This process is known as an Initial Public Offering (IPO) of a company. During IPO proceedings, shares are sold to investors (individuals and institutions) through an investment banker who manages the liquidation of these corporate shares. This is what we call a primary market. Subscription periods are usually allotted by investment bankers for investors to participate prior to having the share prices dictated by market forces of an exchange. After the (IPO), the shares can now be traded publicly through the stock market as an exit mechanism for investors in the primary markets as well as for other participants left out during the subscription period. This is what we call the secondary markets. (stock exchanges). In the secondary markets, company shares can be easily bought or sold through trading in the stock exchange.