The stock market is a collection of markets where stocks (pieces of ownership in businesses) are traded between investors. It usually refers to the exchanges where stocks and other securities are bought and sold. The stock market can be used to measure the performance of a whole economy or particular sectors.
Different types of stock markets
There are different types of stock markets, including exchanges, over-the-counter (OTC) markets, and electronic communication networks (ECNs). Exchanges are the most well-known type of stock market, where most stock trading takes place. The New York Stock Exchange (NYSE), for example, is an exchange.
Over-the-counter markets are less formal than exchanges, where stocks of smaller companies are traded.
ECNs are computer systems that match buy and sell orders for stocks and other securities. ECNs are used by some institutional investors, such as hedge funds, to trade stocks quickly and anonymously.
The stock market can be a great place to invest your money. It offers the potential for high returns, but it also comes with risks. Before investing in the stock market, it’s important to understand how it works and the risks.
The risks of investing in the stock market
There are a few risks associated with investing in stocks. The most obvious one is that the stock may not perform well, and you may lose money. Another risk is that the company may go bankrupt, which means you would lose your investment.
There is also the risk of market volatility, which means that the stock price may go up and down quickly, and you may not be able to sell your shares at the price you paid.
Finally, there is the risk that another company may buy out the company, and you may not receive the same return on your investment as you would have if you had held onto the stock.
However, despite these risks, investing in stocks can be a great way to make money. If you choose the right companies and invest for the long term, you can make a lot of money from your investments. Additionally, if you are willing to take on some risk, investing in stocks can allow you to make much more money than you would if you kept your money in a savings account.
The world’s major stock markets
The World Federation of Exchanges (WFE) regulates 52 Stock Exchanges across the globe, promoting regulatory standards. Below is an excellent infographic comparing money and markets.
Interesting Points to Note
- The US stock market is 46% of the entire world’s stock market capitalization in 2022.
- The US Stock Market is worth more than the next 7 stock exchanges combined.
- Microsoft is worth more than the entire Brazilian stock market.
- Over the last 10 years, 82% of fund managers failed to beat the market.
- Microsoft, Apple & Google combined are worth more than the entire Chinese stock market in 2022.
- In 2022 Apple is worth more than the entire GDP of Canada or India.
- Get More Stock Market Statistics & Facts