What is the Stock Market?
The Stock Market is where investors, traders and companies come together to buy and sell stocks, bonds or any other type of security.
The Stock Market is a very general term that encompasses all the stock exchanges around the world. The largest exchange in the U.S. is the “New York Stock Exchange”, which competes with the NASDAQ stock exchange, American Stock Exchange and others. There are stock exchanges in nearly all developed countries in the world which control the orders for the specific stocks listed on that exchange.
An exchange has specific stocks which are ‘listed’ on that exchange and are available to investors to buy and sell. The New York Stock Exchange has over 2,000 stocks listed that are available for investors to buy and sell, with a total market value of over $14 trillion.
The job of a stock exchange is to provide a place to match buyers of a security with sellers of that security. That can be done on the “floor” in person (as pictured here) or electronically (As the NASDAQ exchange does – and how most investors will do).
As an investor, you can purchase a “seat” on an exchange which allows you access to buy and sell securities on the floor, or you can go through a broker who has access onto the exchange and will typically charge a fee (“commission”) for completing an order.
Companies use the Stock Market to raise money for their business. Companies sell shares of their company to investors in exchange for money which can be used to grow their business.
Investors use the stock market to invest in companies with hopes that the value of the invested companies increase, so that they can make money.
The modern day stock market is responsible for the formation of the multi-trillion dollar financial services industry. Companies like Goldman Sachs, JP Morgan, Fidelity and Vanguard exist to manage people’s investments in the stock market.
For individual investors, the stock exchange represents a savings vehicle that allows you to invest in companies and potentially grow your money. Roughly 50% of Americans own stocks as part of their savings.
Trillions are gained and lost each year in the Stock Market, and investors must tread carefully investing in the stock market. Here at Begin To Invest we will walk you through the process of saving and investing in the stock market. Save yourself time and maximize your gains by following our educational articles, guides and videos.
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