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How the Rich Make Money in Stock Market.
Parker T 
Parker T
Parker
For quick understanding of stock market lets flash our mind back to the meaning of the word Market.
Market as we all know is a place where buying and selling takes places.
Market in general has many characteristics of which one of the characteristics is that it must have more that one point of entry.
Like wise stock market has three viable mode of entry:
1) Private Placement offer
2|) Secondary Market transaction
3) Public Offer
Generally, stock markets trade can be transacted through any of the above medium. Lets explain it one by one.
Private Placement Offer:
This involves a system where by a company approaches a selected individuals or high network investors by the way of invitation to buy stocks in the company. Before a company's stock will be listed in Nigeria Stock exchange, certain requirements must have been reached.
One of the requirements is that the company most have at least 300 investors. For a company to achieve this, they must pass through private placement offer. This is the time the rich and anybody who wants to be rich buys their stocks.
The richest man in the world made 80 % of his money through Private Placement Offer.
Secondary Market:
When the company has satisfied all the requirements of the exchange regulatory (which includes private placement), the company will now be listed and to be traded in stock market. Most time, the Listing price is always twice the private placement prices.
Immediately after Listing, wise investors who missed the opportunity for buying private placement then, will now buy more quantity of that stock.
Public Offer:
Do I hear you say I bought one? Listen, wise and rich investors do not buy public offer. it is a well know fact that most people that buys public offer don't know anything about Stocks. 80% of people that buys public offer are doing that for just for buying sake.
This is the time when most people buys there shares while the wise investors use this opportunity to sell all (off-loads) their stocks to the masses.
Most Companies use this medium to generate money for themselves wherever they want to expands there branches all over the country. One thing that is not so good about this, is that your money will be tired down for a period of 6 months or more waiting for your share's certificate. You cant do anything with that stocks until you get your certificate. Also the price of the stocks here is always on the higher side. Wise investors buys when the price is down and sell when its high.
In conclusion, it is a well known fact that stock market is the only instrument that gives equal opportunity to both the rich and the poor to access wealth and multiply income (either by private Placement, Secondary Market or Public Offer).
Read more of this : http://capitalmarketnigeria.com
Article submitted Sunday, September 28, 2008
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