What is the Stock Market?

What is the stock market?

The stock market is a grouping of buyers and sellers of stocks.  These shares of various public companies are traded based on a bid and ask price where the bid price is what the buyer is willing to pay for the shares while the ask price is the price for which a shareholder is willing to sell their shares.  When the prices meet, the shares are traded from the seller to the buyer.

There are numerous places for which stocks may be traded.  For example there is the Nasdaq where tech companies tend to trade their shares while there is the New York Stock Exchange, NYSE, where many general stocks are traded in the United States.  These are stock exchanges, not indexes, keep that in mind, they are two separate things.  Indexes are a grouping of shares while stock exchanges are where stocks are traded.

Overall, the stock market is what allows the common individual to invest in large companies and grow their wealth.  These companies benefit from the shareholders’ investments and individuals receive dividends and other benefits from owning the stock.  More investors allow for faster growth and this is why these stock exchanges are crucial to business growth long term.