How the stock market works:
Stock markets work by buying stocks for investing in companies. The term stock defines ownership of certificates of any company, shares refer to the ownership certificates of a particular company. If an investor says he owns stock, he is referring to the overall ownership of a company, or multiple companies. If he says he owns shares he then has to include which company he owns the shares to. When profit is made off the company, an investor can choose to give dividend to keep the profit for himself. A dividend is the distribution of earnings to the company’s shareholders. When at the closure of an accounting year, the company has excess cash in its accounts it may decide to invest it in the business or to give it back to its shareholders. These decisions are usually taken by the board of directors. These are some of the biggest stock markets in the world (which also means they are the strongest financially): NYSE (New York Stock Exchange), NASDAQ (National Association of Securities Dealers Automated Quotations), FTSE (Financial Times Stock Exchange), JPX (Japan Exchange Group). All of these stock markets are represented by a ticker symbol. A ticker symbol is a unique combination of characters (usually letters) representing a particular security listed on a stock exchange market.For example Apple ticker symbol is AAPL. In different markets ticker symbols may be different. For example on the NYSE (New York Stock Exchange) symbols are up to three letters while on the NASDAQ (another US stock market) they have four.
Sometimes, to investors can make a fund together in order to pool their money and make a collection of stocks and securities that would be hard to do on your own. This called a mutual fund. It is an investment vehicle funded by shareholders managed by professionals who invest the shareholder’s money with the aim of providing a financial return. The stock market works mostly because of supply and demand. Supply and demand is the fundamental law of economics that regulates any market. The price of any kind of good is a function of the balance between supply and demand. When the demand is higher than the supply the price will increase and vice versa.
The stock market is a market like all the others, when there is a lot of demand for a stock e.g: if everybody wants to buy a share google, the price of the stock will increase and will as a result be very expensive. On the other hand, if people think that another economic crisis will come and prices of real estate will go down therefore they will want to sell shares of real estate companies. In this case, the offer will not change (the number of shares of real estate companies will remain the same but demand will go down). Less people would want to buy those shares as a result, prices will go down. There are pros and cons to investing in the stock market: investing in the stock market is an activity that may provide financial returns, stock market are very liquid so they allow investors to buy and sell at any time, there will always be a buyer and a seller but Markets can be dangerous and unpredictable, investors can lose money also, since the markets change rapidly and unpredictably, investors can be fearful or take advantage of the opportunities that arise. It gives you a chance to grow your money because overtime the stocks rise in value. However, the prices of individual stocks rise and fall daily.
Currently Royal Dutch Shell Companies has the highest percentage of all my three companies and it is starting to rise from the minor fall it has just experienced. Its current value is 51.02 which is higher than its last peak of 50.75. Walt Disney has been unstable throughout these past few weeks and has not been promising but now it is starting to rise again so I am not going to sell it because it is one of the only companies which does not have a negative percentage. However, it is my worst company at this time. The company I own with the highest value right now is Amazon (817.65) and it hasn’t had a major drop since I bought it. However, I wish that I had gotten around September 14th because that is when the major rise really started to occur. Right now I hope that the price of gasoline doesn’t drop again or else Royal Dutch Shell Industries will drop in value and I will have to sell one of the most stable companies I have right now right now. I have 3 shares of Amazon and the Total purchase cost was 2,189.37 which is the most money I have invested in a company at the moment. Therefore, I hope that it keeps its high value and doesn’t force me to sell it.