The stock market is coming together of buyers and sellers who trade in stock. It is nothing like a grocery for buying bread or meat. Firstly, the solitary option is not just to buy stocks; stocks can as well be sold. Secondly, there is a more thorough process for trading in the stock market. One has to go through a licensed brokerage to buy or sell a stock. This brokerage then make trades on your behalf.
Not far behind the stock market is the stock exchange. The Stock exchange is an infrastructure used to aid the buying and selling of shares. It can also be defined as a traditional medium or marketplace where securities, like stocks and bonds, are exchanged between a stockbroker and a trader. It is considered as the key component of a stock market.
55% of Americans are invested in the stock market. A percentage caused by the great depression of 2008. As of then, 62% of America’s adult population owned their stock. Stock investment is strongly dependent on household income, formal education, age, and race. The stock market is not limited to individuals. Big companies are the major players in the stock market. Companies are often seen aiming to be listed on a reputable stock exchange such as the New York Stock Exchange (NYSE) or Nasdaq for attractive reasons.
Some of the benefits of the stock market to listed companies include liquidity for the company’s shareholders, stock option plans that can be put in place for employees, and listed shares that can be used as currency by the company. These might be the reasons why large companies are public rather than private.
Over a long period, stocks generate investment returns that beat every other asset class. Returns on stocks can then be realized through capital gains or dividends. Capital gains are shared profits of publicly-traded companies. And the dividend is the amount given per share of stock one owns. Another way investors profit is by selling their stock. Usually, this is done only after the price has increased.
In conclusion, one major player in the stock market that links participants and acts as financial advisors is the stockbroker. What they do is to buy and sell stocks on behalf of their clients. Their role is, however, more sophisticated than that. Other roles include investment adviser, financial adviser, wealth manager, or investment professional. They are people to be trusted for a smooth investment ride in the stock market.