There's two ways of looking at this (at the most basic level).
Shares for investment, and shares for speculation.
On an investment basis, shares provide a return in two forms - price appreciation and dividends. The combination of the two will give you an effective yield (not an actual yield, in the sense of, let's say, a bond), which is a measure of the overall return that you can expect for your money.
Historically, shares in blue chips provide a sound long-term low-risk investment strategy, significantly in excess of risk-free government bonds (the most that you could expect from a bank savings account).
This is where all of your pension is probably invested - Steady, risk-free and not due to matue for 30+ years.
The second form, speculation, is the headline grabber. This is where you buy shares that you consider to be undervalued, with the expectation that they will rise.
You can do this by taking a view, and holding stock until it appreciates, then sell to take profit (bearing in mind that there is an opportunity cost to holding stock) or as a day-trader, where you take advantage of arbitrage opportunities and pricing inconsistencies (only in a liquid market), and end each day without any share holdings at all.
Either way, unless you have a pile of cash, or you really understand how shares are valued, it's little better than gambling, and only brokers and market makers will make any significant money.
Shares for investment, and shares for speculation.
On an investment basis, shares provide a return in two forms - price appreciation and dividends. The combination of the two will give you an effective yield (not an actual yield, in the sense of, let's say, a bond), which is a measure of the overall return that you can expect for your money.
Historically, shares in blue chips provide a sound long-term low-risk investment strategy, significantly in excess of risk-free government bonds (the most that you could expect from a bank savings account).
This is where all of your pension is probably invested - Steady, risk-free and not due to matue for 30+ years.
The second form, speculation, is the headline grabber. This is where you buy shares that you consider to be undervalued, with the expectation that they will rise.
You can do this by taking a view, and holding stock until it appreciates, then sell to take profit (bearing in mind that there is an opportunity cost to holding stock) or as a day-trader, where you take advantage of arbitrage opportunities and pricing inconsistencies (only in a liquid market), and end each day without any share holdings at all.
Either way, unless you have a pile of cash, or you really understand how shares are valued, it's little better than gambling, and only brokers and market makers will make any significant money.
