What is The Stock Market?
The stock market is basically a place where people can exchange stocks and money. If you want to buy or sell a stock then all you have to do is to simple open up an account with a brokerage and then place the order.
Normally when you buy and sell stuff you have to find the opposite party. If you want to sell your car you have to find a buyer. Well this is true with stocks, but luckily when you have a broker they will automatically match your trade with the opposite trade and because stocks are so liquid they will do it in seconds.
So, now you understand a little bit about what the stock market is and you know that the main reason to have it is to easily match buyers and sellers, but what is a stock?
Well a stock represents a portion or the ownership of a company. For example, if a company has 10 million shares of stock and you buy 100 you own 100/10,000,000 of the company. Or 1/100,000 of the company.
Now with such a small percentage of the ownership of the company you will not have a lot of power in the company. You can’t make the big decisions, but there is another advantage of owning stock in a specific company.
Your stock is worth something. Since you own a percentage of the company you have a tangible security as long as the company is still around. Theoretically the larger the company get the more your stock should be worth.
If you buy stocks in strong companies and hold onto it as they continue to grow your stock will continue to grow over time and eventually your investment has the possibility to grow into something very big over time.
Holding stocks has been a terrific way of building up one’s wealth in the past and it is likely to continue being a terrific way of building wealth in the future. If you have money lying around and want to know where to put it the stock market can be one place to consider.
If you are learning about stocks and still have questions please ask them on this stock market questions page.. This article, What is The Stock Market? is available for free reprint.
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