Market Monday: Stock Market Basics
What do you know about the Stock Market? Honestly, until recently, I didn’t know a lot. Then, I made a conscious effort to learn more about it.
The Stock Market appears to be a really complicated entity, and I’m not going to lie: it’s not easy. But it’s not so crazy that the average person couldn’t learn at least a little bit about it. For the next couple Mondays, we’re going to talk a bit about the stock market; the ins and outs and some basics so that it doesn’t seem SO scary for you. I’ll be doing this in a Q&A format.
What IS the stock market?
- Long story short, the stock market is basically a place to trade company stocks and such at set prices. Stock is how much is invested into a company by original capital or by investors. Basically people who buy stock are paying for part of the investment; you’re getting a piece of paper saying you “own” part of the company. The stock market is a compilation of all these various stocks (or shares, depending on who you ask the terms are used interchangeably).
Why should I care about the stock market?
- The stock market fluctuates with people’s actions. People called brokers are buying and selling for people constantly. If people get nervous (like during the Great Depression), it affects everyone. If stock is not in high demand, the cost goes down, and that hurts the companies involved. This is why the market crashed in 1920’s, people panicked, pulled out their money, and then everything went downhill. If we aren’t educated about how markets work, we may make the same error again.
What’s with all the animal talk (bulls and bears)?
- A bull market is a market that is going up; a bear market is one that is coming down. Bulls and Bears came into stock market lingo in the 1800’s, and there is no certainty as to the origin. The most common explanation is that is based on the way each animal attacks; bears maul you and knock you to the ground, bulls charge into you and toss you in the air.
Are there any questions YOU want answered on Market Mondays? Leave it in the comments!
