How The Stock Market Works

If you want to have an equity position in a company or wish to divest yourself of a stock, you will need a place to transact that business. The stock market is the venue to conduct buying and selling of stock tips and stock derivatives. The marketplace can be a physical location, or it can be accessed electronically. The New York Stock Exchange is one such example of a stock market.

“Publicani” were probably the first groups to offer shares of stock. They were private organizations that performed contract work for the Roman Empire. After the Middle Ages, the first corporate entity to issue stock was the Dutch East India Company. Its initial stock offering in 1606 represents what many believe to be the beginning of the multi-national corporation.

The biggest stock exchange in the world is the New York Stock Exchange. The market value of all the companies listed on the exchange comes in at over $25,000,000,000,000. It began in New York on Wall Street in New York City in 1792. It has significantly grown to where it is not unusual to see more than 2,000,000,000 shares traded daily, with a value of over $41,000,000,000.

A bull market is music to an investor’s ears. Owners of stock can reap substantial profits during this “uptime” in the market. On the other hand, a bear market can result in heartburn for investors caught in the middle of a downturn. The level of profit or loss depends on the number of shares held.

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.

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