Share Market

To understand the stock market one has to understand what a stock is? Simply put, a stock is a share in the overall ownership of the company. If you have a stock of a company, you have that much claim on the company’s assets and earnings. Shares, stocks, equity’s they all mean the same.

Earlier, a stock was represented by a stock certificate which gave you the proof of your ownership. So to trade these stocks one had to go to the place himself and trade these which were very troublesome.

In present day scenario, everything is kept electronically, so no physical certificate is issued. But, instead of knocking at every door to search for a mutual stock trade interest, the stock market came into being where all the trading is done at one location.

A stock market is network of transactions to facilitate the exchange of a company stocks or derivatives at an agreed price. It is a centralized platform where all the buyers and sellers of a stock come together and trade on the basis of some agreement. When a company needs certain surplus amount of money, it sells a part of its ownership in the form of a stock. This helps the companies to expand financially by selling shares of ownership of the company. The money got in exchange is used by the company owners to expand. The stock market is one of the major indicators to know the growth of an economy. If the stock market rises, the economy is said to be growing and vice-versa. Value stock investing is a method that involves purchasing stocks that are going at prices below their worth. Value investors search out stocks the market has under priced and selling them when they are at a higher price.

There are certain fields that influence the stock market prices. These factors are change in economical fundamentals, sector changes and market swings. The other major factor could be the demand and supply balance. There are many theories formulated for the behavioral trend of the stock market but till this date it is highly irrational.

To fully understand the stock market, you have to know the economical and financial trends of the companies and many other factors. But in the end it all depends on the how well an individual understands this.