THE BASICS #1: SETTING THE STAGE
Before you jump into the curriculum, I need to set the stage with three things:
#1: Companies are in business to GROW. They are incentivized to make more money, and they can do that by hiring more employees, selling more products, and attracting more customers.
- In very simple terms, this is one of the biggest factors that drives the stock market.
- So, if you're ever confused by some news that seems to have an effect on the stock market, ask yourself:
- What types of companies might be affected by this news?
- Will this make it easier for them to grow / make more money?
- Or will it create challenges, stunt growth, or possibly cause them to lose money?
#2: Let's pretend that friends and family always rave about the cakes you bake, so you decide to start a cake business in your house. Why? To make MONEY.
#3: Finally, a working example that we'll continue to refer to and build upon:
- Your cake business and all of its assets (everything valuable that it owns like ingredients, equipment, the brand, etc) are represented by one big metaphorical CAKE.
- You start the company on your own and use your own money to get it off the ground. You own 100% of your company. You don't owe anyone anything.
- Your ownership, your company's assets, that CAKE, equal something called equity. (See THE BASICS #3: EQUITY for a more thorough explanation.)