April 21, 2010
Stock Market Basics
A stock market is a place to either buy or sell shares of stock. This occurs at a physical location or it can be done via a computer. Stock represents an equity position in a traded company.The New York Stock Exchange is one example of where stock tips or stock derivatives can be publicly traded.
The existence of a stock market can be traced back to the Roman Empire when the Empire contracted work out to “publicani, ” private groups that offered shares to investors. Following the Middle Ages, The Dutch East India Company in 1606 became the first company to issue stock, and can arguably be seen as the first multinational company.
Today, there is no other stock exchange larger than the New York Stock Exchange. If you were to add up the total stock value of all its listed stock, you would come up with a market capitalization in excess of 25 trillion dollars. The NYSE has grown tremendously since its origins on Wall Street in New York City in 1792. In fact, the volume of shares traded daily can exceed 2 billion, the value of which can exceed $41 billion.
A stock market can be a place to make or lose an enormous amount of money. During bull markets, those holding significant numbers of shares in a company whose stock is in demand can realize handsome profits. Conversely, those with considerable stock ownership during bear markets can be subject to profound loss.
October 24th, 1929 has been recorded in the history books as Black Thursday. It was then that the NYSE saw the start of a precipitous fall in the value of stocks. Panic selling kicked in five days later on Black Tuesday. On that day the value of shares dropped in excess of $14 billion. Some mark this financial catastrophe as the advent of the Great Depression.
The Internet has had a substantial effect on stock markets. Today investors can execute their orders electronically, straight to the exchange’s floor. Regardless, however, of how a stock is traded, bulls and bears will always be present.
For more on the stock market subscribe to the WallStreetWindow stock trading newsletter written by Mike Swanson.
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