I'm 15 and could somebody please explain what stocks are and how you make money investing off them ?

[Bob]

A stock is an ownership share in a corporation. Each of these shares denotes a part ownership for a shareowner, stockholder, or shareholder, of that company.

When a company releases an IPO (initial public offering, when a company offers shares to the public), investors can purchase these shares and will be part of owning the company.

There are two types of investors, value and growth investors.

Growth Investors:
Look for smaller companies with high growth potential.
Do not look for companies that pay dividends (a portion of profit paid to the shareholder); they would rather see that cash kept and used productively by the company.
Look for high P/E ratios, a measure of stock price compared to net earnings per share.
Have speculation; generally more risky.

Value Investors:
Look for larger, established companies with long history of stable earnings, good reputation.
Look for dividends!
Look to buy shares that are currently selling at a price below their intrinsic value.
Look for low P/E ratios.
Generally less risky, “buy and hold” mentality of long-term investing.
Like to invest in large-cap stocks (Facebook, Apple, etc.)

You make capital gains (money) by purchasing stocks, and if the demand for the stock(s) you invest in goes up, so does the price. Therefore the market value of your stock(s) go up, and you can sell this, therefore liquidating your assets.

For example, if you purchased a stock from Tesla Motors on January 13th, 2013 for $22.79. You decide to sell it today, January 16th, 2014 for $170.97. The capital gain is made from $170.97 minus $22.79, = $148.18 minus transaction fees from your stock broker.

Another way of making capital gains is if you short-sell.
It is the practice of selling shares of stock that have been borrowed from a third party in exchange for a fee, with the intent of buying these shares back on a future date to return the lender.

Short-sellers believe that the market price of a stock is going to drop and so they borrow stock and sell it now at the current price before a pre-arranged future date to return shares to the lender.
Short-sellers make a profit if they speculate correctly and the stock price falls, but they lose money if the stock price increases because they are forced to buy back these shares at a higher price so they can return them to the lender.
A short seller’s profit is the difference between what they sell the borrowed shares for and what they are forced to pay in the market to buy back these shares for the lender; minus fees, commissions paid to the broker/lender.