Stock Market 101: Stock Market Crash Course

Stock market is like a market place for businessmen In a public
market, goods are sold to the public In a stock market however,
stocks are sold to the public Company stocks are sold in the
form of shares The more shares a person buys in a company, the
higher his or her stocks are for that particular company
The stock market consists of the primary market and the
secondary market Primary market is where companies raise
finances for their operating expenses by selling shares to
investors The secondary are investors who buy and sell those
shares to other investors Their decisions are constantly based
on changing market conditions
A stock market is like an auction house It is a systematic
method of buying and selling In a stock market though, it is a
common sight to see people shouting and gesturing at one another
The buying and selling of stocks begins in different places If
a person decides to purchase stocks in a particular company, a
broker is contacted This broker in turn takes the money of the
investor and coordinates with a floor broker at the stock
exchange Usually a floor broker works for the broker or with
the company selling the stocks
At the stock exchange, floor brokers purchase the stock that the
investor wants When a deal is consummated, it is made known to
a broker and the investor becomes a stockholder of the company
That investor may decide to sell the stock This is usually done
when the price per share has gone up This entails profit for
the investor For example, if a person bought 100 shares at
$2000 per share and the price increased to $2500, selling
those 100 shares results in $50000 profit
The economic principle of supply and demand is the driving force
of the stock market The number of shares of stocks that are
open to the public dictates the supply and the number of shares
that investors want affects the demand
Movement of stocks in a certain market causes the constant
changes in the prices of stocks
For example, if most people believe that the economy is growing,
they would buy more stocks But if the economy is in a downfall,
their tendency is to sell their stocks
Many businessmen choose to make a long term investment in the
stock market There are instances where stocks decrease in value
causing a stockholder to lose money The stock market does not
guarantee profit The better a person is in reacting to the
changes at the stock exchange; the better his chances are for
profit

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