Full Answer
What is the stock market?
The Stock Market is a general term for all trading centers (stock exchanges) that enable the exchange of shares of public companies. Today, the term Stock Market refers to all the stock exchanges in all the countries of the world. We can view all Stock Exchanges around the world as part of one giant global Stock Market.
Why is the stock market important?
Firstly it provides capital for new companies to fuel their growth via an IPO. Secondly, the majority of people in developed economies have their retirement fund invested in stocks via a 401K or IRA.
What is day trading?
Day Trading is the practice of buying and selling stocks each day. Day Traders speculate in stocks in an attempt to make a quick profit each day. Learning what common stock market terms mean is the best way to understand the market.
What is common stock?
Common Stock is another term for publicly traded shares of stock. Companies list Common Stocks on exchanges. Anybody can buy Common Stock. Common Stockholders usually have voting rights in a company.
What does it mean to be in a bull market?
Observers often use the term Bull Market to describe investors’ moods. In a Bull Market, the investors are happy and confident about the market’s future. A Bull Market does not always indicate a good economy. Instead, all a Bull Market shows is that investors think the economy is good.
What does a bear market show?
A Bear Market does not show the health of the overall economy. Instead, the market shows investors’ view of the economy’s health. If investors think the economy is bad, they sell, creating a Bear Market. If investors believe the economy is good, they buy, creating a Bull Market.
Why do stocks bubble?
Investor overconfidence and fear of being left out of moneymaking opportunities drive Bubbles. Bubbles sometimes occur when prices for only one class of investments grows. For instance, Stock Market Bubbles often occur when interest rates are low and the real estate and commodities markets are stagnant.
