Understanding the U.S. Stock Market
️ Market Structure & Platforms
• NYSE (New York Stock Exchange): One of the world’s largest exchanges; home to Coca-Cola, JPMorgan, etc.
• NASDAQ: Tech-heavy exchange; home to Apple, Microsoft, Tesla.
• AMEX (American Stock Exchange): Smaller exchange; now called NYSE American.
• OTC (Over-the-Counter): Off-exchange trading, often for smaller/riskier companies.
Trading Terms
• Pre-market / After-hours: Trading before 9:30 a.m. EST or after 4:00 p.m. EST.
• Limit vs Market Order: Limit = set your price; Market = buy/sell instantly at available price.
• T+2 Settlement: Trades finalize 2 business days after execution.
• Dark Pools: Private trading venues for large institutional orders.
Financial Metrics & Reports
• Form 10-K / 10-Q: Annual (10-K) and quarterly (10-Q) filings to the SEC.
• Earnings Season: Happens 4x a year, when companies release financial results.
• EPS (Earnings Per Share): Key measure of profitability.
• Forward Guidance: U.S. companies give future growth expectations.
⚖️ Regulation & Oversight
• SEC (Securities and Exchange Commission): Primary regulator of securities.
• FINRA: Oversees brokers and brokerage firms.
• SIPC: Limited investor protection if a broker fails.
Investment Products
• Roth IRA / Traditional IRA: Retirement accounts with tax advantages.
• 401(k): Employer-sponsored retirement savings plan.
• SPACs (Special Purpose Acquisition Companies): Shell firms for acquisitions.
• REITs (Real Estate Investment Trusts): Companies that own income-producing real estate.
Market Indices
• S&P 500: 500 largest U.S. companies (major benchmark).
• Dow Jones (DJIA): 30 blue-chip companies.
• Russell 2000: Focus on smaller U.S. companies.
• NASDAQ Composite: Tech-heavy index.
Common U.S. Investor Terms
• Dividend Aristocrats: S&P 500 firms that raised dividends for 25+ years.
• FAANG/MAANG: Meta, Apple, Amazon, Netflix, Google.
• Short Selling: Betting on a stock’s decline.
• Circuit Breakers: Market halts triggered by large sell-offs.
• Buybacks: U.S. companies repurchase their own shares.
2. What Is the U.S. Stock Market?
Simple Analogy:
“The stock market is like Balogun or Alaba market — but instead of tomatoes or electronics, you’re trading pieces of companies (shares/stocks).”
Key Exchanges:
• NYSE: Traditional, oldest, home to global brands.
• NASDAQ: Tech-driven, home to Apple, Microsoft, Tesla.
Why It Matters Globally:
• Most liquid, regulated, and trusted market.
• Attracts investors worldwide, including Africans.
3. Why Invest in U.S. Stocks?
• Diversify Your Income: Earn in USD while living in Nigeria.
• Own Global Companies: A share in Apple = stake in a global giant.
• Strong Regulation: Safer under U.S. investor protection rules.
• Hedge Against Naira Depreciation: Dollar value protects your wealth.
4. Key Terms Explained
• Stock/Shares: Like owning a slice of cake = part ownership of bakery.
• Dividends: Share of profits (the bakery gives you a piece of the gain).
• Index: A basket of top companies (S&P 500 = Premier League of 500 firms).
• Bull Market: Prices rising, optimism.
• Bear Market: Prices falling, caution.
• Broker: The middleman (“your plug”).
• Portfolio: Your collection of stocks (personal empire).
5. Steps to Start Investing
1. Choose a Broker:
• U.S.: Schwab, TD Ameritrade, Robinhood
• Africa: Chipper Cash, Bamboo, Risevest, Trove
2. Fund Your Account:
• Card, USD deposit, or domiciliary account.
• Start with as little as $10–20.
3. Do Research:
• Google Finance, Yahoo Finance, app tools.
• Understand what the company does & profitability.
4. Buy Stock or ETF:
• Start with ETFs like VOO or SPY if unsure.
6. ETFs vs Individual Stocks vs Index Funds
• ETF (Exchange-Traded Fund): A basket of companies; spreads risk.
• Individual Stock: One company, higher risk/reward.
• Index Fund: Similar to ETFs, but bought once a day (not traded throughout).
Examples:
• VOO / SPY: Track S&P 500.
• QQQ: Tech-focused.
• VTI: Total U.S. market.
• ARKK: Innovative, high-risk.
7. Monthly Dividend Stocks
• Realty Income (O): “The Monthly Dividend Company” (4–5% yield).
• STAG Industrial (STAG): Industrial REIT (4–5%).
• Main Street Capital (MAIN): BDC (6–7%).
• LTC Properties (LTC): Healthcare REIT (5%).
⚠️ Risks:
• Sensitive to interest rates.
• Heavy concentration in REITs/BDCs.
• Taxed differently.
• Currency risk (USD/NGN).
8. Picking Individual Stocks — Step-by-Step
1. Define goals (growth, dividends, short/long-term).
2. Choose a strategy (value, growth, dividend, thematic).
3. Use screeners (Yahoo Finance, Finviz, Morningstar).
4. Research company (business, financials, moat, management).
5. Check analyst opinions (Seeking Alpha, Zacks, TipRanks).
6. Look at charts for entry timing.
7. Diversify across sectors.
8. Monitor news, earnings, industry trends.
Hot 2025 Focus Areas:
• AI & Semiconductors (Nvidia, AMD).
• Healthcare & Biotech (Eli Lilly, Regeneron).
• Green Energy (NextEra).
• Consumer Resilience (Costco, McDonald’s).
• Dividend Stability (PepsiCo, P&G).
️ Market Structure & Platforms
• NYSE (New York Stock Exchange): One of the world’s largest exchanges; home to Coca-Cola, JPMorgan, etc.
• NASDAQ: Tech-heavy exchange; home to Apple, Microsoft, Tesla.
• AMEX (American Stock Exchange): Smaller exchange; now called NYSE American.
• OTC (Over-the-Counter): Off-exchange trading, often for smaller/riskier companies.
Trading Terms
• Pre-market / After-hours: Trading before 9:30 a.m. EST or after 4:00 p.m. EST.
• Limit vs Market Order: Limit = set your price; Market = buy/sell instantly at available price.
• T+2 Settlement: Trades finalize 2 business days after execution.
• Dark Pools: Private trading venues for large institutional orders.
Financial Metrics & Reports
• Form 10-K / 10-Q: Annual (10-K) and quarterly (10-Q) filings to the SEC.
• Earnings Season: Happens 4x a year, when companies release financial results.
• EPS (Earnings Per Share): Key measure of profitability.
• Forward Guidance: U.S. companies give future growth expectations.
⚖️ Regulation & Oversight
• SEC (Securities and Exchange Commission): Primary regulator of securities.
• FINRA: Oversees brokers and brokerage firms.
• SIPC: Limited investor protection if a broker fails.
Investment Products
• Roth IRA / Traditional IRA: Retirement accounts with tax advantages.
• 401(k): Employer-sponsored retirement savings plan.
• SPACs (Special Purpose Acquisition Companies): Shell firms for acquisitions.
• REITs (Real Estate Investment Trusts): Companies that own income-producing real estate.
Market Indices
• S&P 500: 500 largest U.S. companies (major benchmark).
• Dow Jones (DJIA): 30 blue-chip companies.
• Russell 2000: Focus on smaller U.S. companies.
• NASDAQ Composite: Tech-heavy index.
Common U.S. Investor Terms
• Dividend Aristocrats: S&P 500 firms that raised dividends for 25+ years.
• FAANG/MAANG: Meta, Apple, Amazon, Netflix, Google.
• Short Selling: Betting on a stock’s decline.
• Circuit Breakers: Market halts triggered by large sell-offs.
• Buybacks: U.S. companies repurchase their own shares.
2. What Is the U.S. Stock Market?
Simple Analogy:
“The stock market is like Balogun or Alaba market — but instead of tomatoes or electronics, you’re trading pieces of companies (shares/stocks).”
Key Exchanges:
• NYSE: Traditional, oldest, home to global brands.
• NASDAQ: Tech-driven, home to Apple, Microsoft, Tesla.
Why It Matters Globally:
• Most liquid, regulated, and trusted market.
• Attracts investors worldwide, including Africans.
3. Why Invest in U.S. Stocks?
• Diversify Your Income: Earn in USD while living in Nigeria.
• Own Global Companies: A share in Apple = stake in a global giant.
• Strong Regulation: Safer under U.S. investor protection rules.
• Hedge Against Naira Depreciation: Dollar value protects your wealth.
4. Key Terms Explained
• Stock/Shares: Like owning a slice of cake = part ownership of bakery.
• Dividends: Share of profits (the bakery gives you a piece of the gain).
• Index: A basket of top companies (S&P 500 = Premier League of 500 firms).
• Bull Market: Prices rising, optimism.
• Bear Market: Prices falling, caution.
• Broker: The middleman (“your plug”).
• Portfolio: Your collection of stocks (personal empire).
5. Steps to Start Investing
1. Choose a Broker:
• U.S.: Schwab, TD Ameritrade, Robinhood
• Africa: Chipper Cash, Bamboo, Risevest, Trove
2. Fund Your Account:
• Card, USD deposit, or domiciliary account.
• Start with as little as $10–20.
3. Do Research:
• Google Finance, Yahoo Finance, app tools.
• Understand what the company does & profitability.
4. Buy Stock or ETF:
• Start with ETFs like VOO or SPY if unsure.
6. ETFs vs Individual Stocks vs Index Funds
• ETF (Exchange-Traded Fund): A basket of companies; spreads risk.
• Individual Stock: One company, higher risk/reward.
• Index Fund: Similar to ETFs, but bought once a day (not traded throughout).
Examples:
• VOO / SPY: Track S&P 500.
• QQQ: Tech-focused.
• VTI: Total U.S. market.
• ARKK: Innovative, high-risk.
7. Monthly Dividend Stocks
• Realty Income (O): “The Monthly Dividend Company” (4–5% yield).
• STAG Industrial (STAG): Industrial REIT (4–5%).
• Main Street Capital (MAIN): BDC (6–7%).
• LTC Properties (LTC): Healthcare REIT (5%).
⚠️ Risks:
• Sensitive to interest rates.
• Heavy concentration in REITs/BDCs.
• Taxed differently.
• Currency risk (USD/NGN).
8. Picking Individual Stocks — Step-by-Step
1. Define goals (growth, dividends, short/long-term).
2. Choose a strategy (value, growth, dividend, thematic).
3. Use screeners (Yahoo Finance, Finviz, Morningstar).
4. Research company (business, financials, moat, management).
5. Check analyst opinions (Seeking Alpha, Zacks, TipRanks).
6. Look at charts for entry timing.
7. Diversify across sectors.
8. Monitor news, earnings, industry trends.
Hot 2025 Focus Areas:
• AI & Semiconductors (Nvidia, AMD).
• Healthcare & Biotech (Eli Lilly, Regeneron).
• Green Energy (NextEra).
• Consumer Resilience (Costco, McDonald’s).
• Dividend Stability (PepsiCo, P&G).