An Overview of the Stock Market

The term stock market is self explanatory. It is a marketplace, either physical or virtual, for the buying and selling of shares of stocks or stock derivatives (i.e. Options). Owning a stock tip means having an equity stake in a particular company, the shares of which are publicly traded at a stock exchange or stock market, for example the New York Stock Exchange (NYSE).

“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 stock market can be a place to make or lose an enormous amount of money. During bull markets, those holding significant numbers of shares in a company whose stock is in demand can realize handsome profits. Conversely, those with considerable stock ownership during bear markets can be subject to profound loss.

One of the most catastrophic events in the history of the NYSE began on Black Thursday. On October 24 of 1929 the value of most stocks dropped precipitously. This led to a selling panic five days later, a date which came to be known as Black Tuesday. The market value of company shares dropped by fourteen billion dollars. The “Crash” was a prime factor in ushering in the Great Depression.

Investors have long spent time trying to determine the next bull or bear market. What is new is that the Internet has had a profound impact on trading stock. Nowadays, investors can make a beeline straight to the exchange floor and buy or sell stocks at the touch of a few keys.

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