Stock Market

How does the stock market work?

If the idea of   investing in the stock market scares you, you are not alone. People with very limited experience in investing in stocks are afraid of horror stories in which the average investor will lose 50% of the value of their portfolio, for example, in the two bear markets that have already appeared during this period. Millennial1, or are attracted to "good deals," which promise great rewards but rarely pay off, so it is not surprising that the investment mood pendulum swings between fear and greed.


Definition of "share"

A share (also called "equity" of a company) is a financial instrument that represents the ownership of a company or corporation and represents a proportional claim on its assets (what it owns) and its earnings (what it owns).

Participation means that the shareholder owns a stake in the company equal to the number of shares compared to the total number of shares outstanding in the company. For example, a natural or legal person who owns 100,000 shares in a company with one million outstanding shares would have a 10% stake. Most companies have multi-million or billion dollar stocks outstanding.

What is an exchange?

Stock exchanges are secondary markets where existing shareholders can do business with potential buyers. It is important to understand that publicly traded companies do not buy and sell their own shares on a regular basis (companies can buy back shares8 or issue new shares9, but this is not a common transaction and often occurs outside the framework of an exchange). So when you buy a stock on the stock market, you are not buying it from the company, but from another existing shareholder. When you sell your shares, you do not sell them to the company, but rather resell them to another investor  Read More...

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