The Basics of the Stock Markets

Many investors never stop to think about the stock market and how it first started. Public stock markets have been around for centuries as the first to be reported was the Amsterdam Stock Exchange which was founded back in the seventeenth century. This exchange is what first started the buying and selling of stocks in the form of company shares. Most developed countries now have a stock market thanks to the Amsterdam Stock Exchange. For those who wish to trade in the largest markets, look no further than the United States, Canada, China, Germany, Japan and the United Kingdom.

A stock market is nothing less than a marketplace where shares are sold instead of goods. Company stock is traded at a set price by sellers and buyers. The word stock means nothing more than money which has been raised by a company. This money may come from individual investors or it may come from other organizations. When you buy stock, you are buying ownership in a company which is referred to as a “share”. Those who own stock are known as either stockholders or shareholders.

Investing in a company is done for a number of reasons. The reason most buy a stock is in the hopes that they company will earn money. When a profit is realized, shareholders receive a portion. When a company flops though, an investor won’t recoup their initial investment. In most cases, shareholders can vote on issues which affect the company. This may be done yearly or more frequently, depending on which company you invested in. Quarterly or annual reports may also be sent to all stockholders.

In order for a company to participate in a stock market, they must first offer stocks for sale in the form of an initial public offering. Once this has been done, stocks may be traded through the use of a stock broker. One may also choose to be his own broker by using an online trading website. When the stock market appears to be on a downhill slide, it is referred to as a “bear” market. Stocks are cautiously bought if this is the case. A “bullish” market is one in which stocks appear to be on the rise. When this happens, more choose to invest. Although there is much more to the stock market, these are the basics which any investor should know.

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