Stock (Equities) Market

The stock market is where sellers and buyers trade shares of stock for a pre-defined price. In the world of finance, a "stock" is an amount of money that a company has raised from organizations or individuals. When you buy stock, that means you actually own a part of the company (called a share). Those that own stocks are known as stockholders or shareholders.

Shareholders buy shares in the hopes that the company they've invested in will become profitable, because their shares entitle them to a percentage of the profits. Conversely, if the company loses money, the shareholder will lose part or all of their investment. In most cases, shareholders have the right to vote; usually they get one vote for each share they own. Most bigger companies have a meeting each year where the shareholders get to vote on important issues, and shareholders also get quarterly and annual financial reports.

When a company wants to sell of some of its shares, it lists the stock on the exchange. The NYSE (New York Stock Exchange) and the National Association of Securities Dealers (NASDAQ) are the most well known exchanges. They are set up to make it more simple for people to buy and sell stocks. When someone wants to trade a stock, they usually call a stockbroker, which is a firm that's been authorized to trade on the stock exchange. The stockbroker will relay the trade to the appropriate exchange floor, and there, a representative completes the trade. The broker gets a commission for doing this, but in recent years, people have gone the DIY route by using online trading sites.

When the stock market declines, it is said to be "bearish". Here, investors are more cautious about buying stock. When people believe that the stock market is on the uptick, that's known as a "bullish" condition. Here, traders are more likely to spend. If the price of a group of stocks is on the rise, the market turns bullish, and if they fall, the market is bearish.

The first stock market that was opened to the public is the Amsterdam Stock Exchange, which was founded in the early 1600s and began the buying and selling of company shares. There's now a stock market in almost every developed country around the world, but the world's largest stock markets are in the UK, the US, China, Canada, Germany and Japan.