What is the stock market?

The stock market is a place where investors trade certificates that indicate partial ownership in companies at a specified price. Through these transactions, companies may increase the initial capital necessary for different aspects of traffic and those who buy certificates are entitled to part of the assets and earnings of the company. Although the value of certificates is not static and largely depends on the perception of the public, the stock market remains one of the main investment resources and can be used as an indicator of overall economic health.

When companies need money for different goals, one of the options they have to obtain capital is to divide the ownership of their businesses into parts known as shares. They sell these shares and use resources for tasks such as product development or buying buildings and equipment. To provide some evidence of this ownership division, they print certificates called Stock and individuals who buy certifitates are called shareholders. Many people use the words “shares”And "shares" - or similarly "shareholder" and "shareholder" - interchangeably because of their close relationship, but the former term technically speaks of certificates for all Company in a very general sense and the other usually associates with the only particular trade.

As part -owners in the company, shareholders are entitled to the percentage of assets and earnings for the company. They usually hope that the business they have invested in earns money because they will then receive some profits - in fact, the basic goal is usually to buy supplies when the price is low and sell it when the value is high. They usually also have voting rights with ordinary shares, they usually receive one vote on corporate issues for each certificate they own, and generally receive annual or Quarterly reports to know how the companies are doing financially. Preferred shares usually do not provide voting rights, but many people like them, forThis gives shareholders more earnings and assets and because they provide payment priority to investors if the company fails and liquidates what it owns.

market purpose

At the most basic level, the stock market provides an organized way to connect with potential investors who might want to buy shares and become partial owners. If a corporation wants to sell shares of its company, it usually states its stock stock shares, an organization that organizes all activities related to the purchase and sale of certificates. Entrepreneurship must usually meet specific requirements to get on the stock exchange, so investors usually consider them less risky compared to businesses that sell "above the counter" (OTC) or without stating. The New York Stock Exchange (NYSE) D National Sealers' Association (NASDAQ) are commonly used by stock exchanges in the United States.

Basic sales process

When individuals are interested in buying or selling shares, they usually contact a stock broker who is a person who works in the company justified to trade on stock exchanges. It transmits a commercial report to the floor of the correct exchange, usually receives a commission for its service and then evaluates the company's representative. In the past, the floor was a physical place on the stock exchange where stock brokers met to make sales and shopping transactions, but today are virtual, electronic floors using internet or telephone interactions much more common.

The common misconception is that one must have a lot of money to go through this process. The individual must consider the potential for earnings against the purchase fee, but many shares are relatively cheap and provide good return and because the brokers get a commission for each trade, they are usually willing to complete transactions that process a relatively low number of certificates. In addition, many people associate their resources in what is called a mutual fund that allows investors to work on buying moree or more expensive shares.

warehouse value

The value of the shares is initially determined when the company organizes an event called the initial public offer (IPO), during which the investment bank uses various complex techniques and formulas to estimate how much the company costs. The business then divides this award with the number of shares it wants to offer. After that, however, the value of shares certificates largely depends on the perception of the public. According to the basic principles of supply and demand, when people think that companies are not doing well, usually do not want to buy stock certificates and demand for them, which reduces their value. Conversely, if Thinks Business is successful and has profits and assets to divide, investors usually want to buy shares and demand and the certificate is increasing.

Bear and Bull

If an individual believes that the stock market will decline, it is referred to as "bear" and usually buys supplies very carefully. People who think it will go up is calledThey tend to invest more aggressively. Likewise, if shares prices are rising together, the stock market is called the "Bull Market". However, when stock prices as a group tend to fall, people call it a "bear market".

Connection to the financial portfolio

Investors have many different options in terms of where to put their money, such as real estate, savings accounts, pension funds, education plans for education and bonds. Stock certificates are simply a choice again. Traditionally, however, they generally exceeded other investment areas, providing more payouts. For this reason, most financial experts consider them an essential part of the portfolio of healthy investments and encourage people to regularly participate in the stock market.

Although experts do not always agree on what is the "best" way to buy or sell stocks, they usually recommend investors to buy shares from many different companies. This reduces the risk of extreme loss of money because if one belowNothing goes bankrupt, one can still have many other certificates that are valuable. Some individuals take it even further and claim that just buying from more than one society is not enough - they say that people should make sure that their supplies come from more , because lack or disputes often affect the entire sector.

Economic Health indicator

To some extent, the stock market can show how solid the economy is. Generally, the economy has trouble because people tend to stop purchasing certificates when money is tight, instead focuses on needs such as food or mortgage payments. The decline is also associated with the fact that many companies are interconnected, such as a computer business that buys microprocessors from the manufacturer. When one company suffers, others often do too. On the other hand, bull markets usually indicate that individuals can afford to invest again and buy again, or with respect to the connection with perception and onMisery and demand that they simply believe that the economy is recovering.

brief history

The first public stock market is said to be the Amsterdam exchange. This Dutch Stock Exchange was founded at the beginning of the 17th century and started the trend of purchasing and sales of the company's shares. There are now exchanges in most developed countries. They are the largest in the United States, the UK, Canada, Germany, China and Japan.