Name: Stock Market For Beginners 2020
Uploaded: 2020-08-24T19:10:29.000Z
Duration: 11 min 3 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Basic passive voice

When you look at the stock market, it's difficult to understand why each stock is priced in

I mean, look, we all have heard the news that Apple is the first trillion-dollar company,

its world's biggest and most successful company.

Maybe the stock price should be higher as well, right?

Apple's stock price right now is 258 dollars, while a company that is hundreds of times

smaller like NVR Incorporated has a stock price of 3000 dollars.

Does that mean that NVR incorporated is bigger than Apple, the short answer is No.

However, it's a little bit more complicated than it might seem.

In fact, the entire stock market seems quite complicated at first look.

But there is a logical explanation behind most of the things.

To make a sense out of the stock market, we have to understand what a stock is in the

Let's say, For the last 6 months, you have been thinking of starting a business.

The only problem you have is, you don't know what business to start.

One day, on your way to college, an idea strikes your mind.

You pull out your phone and write it down, you rush to your house and start planning.

Everything looks perfect; you know how to turn your idea into a multi-billion dollar

But its too early to celebrate because you don't have the capital to start.

You gather your family members, and you explain to them the idea hoping that they will invest

Everyone thinks you are crazy, except your uncle, who decides to bet on you.

10 thousand dollars in exchange for 20 percent of the company.

It might not seem much, but it's actually a lot.

Because your uncle just valued your idea that's not proven yet at 50 thousand dollars.

So you register your company, issue 100K shares, and your uncle gets 20K of them.

You start building your website and designing your product.

In a few months, you run out of cash, and you need to raise more money.

Unlike last time, where you simply had an idea.

So, instead of going to your uncle again, now you can do something different, like talking

Angel investors are usually the rich dudes who are looking for innovative ideas or young

It's not easy to convince these guys to throw money into your business, because statistically,

And you have to prove to them why you are an exception.

After talking to multiple angel investors.

Luckily, you could get one of them on board.

But first, you have to agree on the valuation.

There is pre-money valuation and post-money valuation.

Pre-money valuation is how you value the company before receiving the investment.

And post-money valuation is pre-money valuation plus the investment.

The higher the pre-money valuation, the less portion of the company the investor is going

You enter into a negotiation, and you convince the investor to throw 1 million dollars into

your business, with 2 million dollars post-money valuation.

So the investor is going to take 50 percent of the company (1/2).

And your shares will get diluted together with your uncle ones.

That doesn't mean, you are going to have fewer shares, the company will simply issue another

So, now there are a total of 200K shares instead of 100K shares, and your stake is 40% ( since

you own 80K share and your uncle's stake is 10%).

With a million-dollar, you rent an office, hire some designers, engineers, and specialists

Finally, everything is ready; you are about to lunch your product, app, service, whatever.

And you still need a marketing budget and salespeople, so you decide to raise some more

This time, you meet some VCs or Venture Capitalists.

They are not your typical angel investors.

These are dudes with MBAs and work in Venture Capitalists firms, who take other people's

money and invest in companies such as yours.

Anyways, after multiple negotiations, they decide to bet on you.

Since you already have a team and a product to launch, your company hopefully now worth

Lets say the VC offers you a 10 million dollar investment with a 20 million dollar post-money

You find that offer fair, and you accept it.

The company issues another 200K shares, and everyone's stake gets diluted again.

Since the VC just purchased 50% of the company.

(your 20%, uncle's 5%, angel investor 25%)

The angel investor, for example, had 50% of 2 million dollars when he invested in the

Now he has 25% of a company that worth 20 Million dollars (which is 5 Million dollars).

In fact, your stake worth now 4 Million dollars.

Anyways you can go for Series C, D, and so on.

Remember, everyone who has invested in your company has been waiting for you to grow big

Especially your uncle, who's 10K investment now worth millions.

You have two options, you either get sold to one of the giants of the industry like

And that's known as IPO - Initial public offering.

It's just another way to raise funds and issue shares, but this time, anyone can buy your

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Stock Market For Beginners 2020

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