In recent times, the world has offer many things which can make life more convenient for everyone. We should all have alternative streams of income to ensure that they and their family can survive without going bankrupt. The stock market always promises good returns on investment. But sadly, many who would want to venture into the stock market always find it strange and are therefore discouraged from participating in it for fear of an ugly outcome. While it is too quick to discourage oneself against trying to trade on the stock market especially where one has not gotten adequate knowledge about how the stock market operates, it is therefore imperative that one tries to learn the basics of the stock market and how it works so as to have a better experience when one eventually gets in.
What the Stock Market Is
The stock market is much different from the typical market which you already know.This is due to the collection of various financial transactions which involves sellers and buyers dealing on stocks. In the stock market, one could be a shareholder, owning a part of the business, and getting a share of the assets (in this case, stock) of the business as well as its liabilities. The operation of the stock market is not however a straight-forward one as it involves a lot of financial analysis as well as forecasts.
Investors in the stock market often refer to the stocks market as a group of markets and exchanges of stocks involving offering and trading of bonds, equities (ownership of stocks), and other forms of securities. People who own the same numbers of stocks in a given company get equal number of voting rights when the company needs to make an important business decision, usually during the company’s annual general meeting (AGM).
The number of shareholders a company may have is not limited. They could be in hundreds or even more, each shareholder owning a percentage of the company depending on the amount of stocks which each shareholder owns in the company. Shareholders therefore do not own the entire company but a percentage or fraction of it depending on the amount of stocks each owns in the company. The value of stocks owned or dividend received by each shareholder depends on amount of stocks owned by such shareholder as well as the state of business at the time of financial report. This means that a shareholder also bears the effect of any business risks and successes recorded by the business as the value of the stocks owned by each shareholder could improve when business is good or plummet when business is bad.
What the Stock Market Is Not
Many see the stock market is a gambling ground due to the associated risks which makes money to change hands abruptly. But then, the whole financial process in life takes the same format of changing hands to the more successful.
So, it is not gambling per say, but simply a process with two opposite ends of either a gain or a loss. One should know that in the stock market, one does not lose completely except the company dies or something bad happens to the company as will be seen in a later part of this book.
The goal of this blog is to help you make wise financial decisions and maximize the dividends of your investment. As you read on, I will hold you by the hand and help you to learn more about the secrets of the stock market. Now, let us look at how the stock market has coped in the past.
Ruffled Past the Stock Market
The twelfth century saw the rise of a French company, Courtiers De Change, with a team regarded as the earliest brokers, who primarily helped financial institutions to manage debts incurred on agro communities.
BrugseBeurse was a thirteenth century coalition of stock traders in the late 1409, founded by Van der Beurze in his own house in Bruges. Antwerp, which at that time became the preferred trading centre for stock merchants, played host to the coalition of stock traders who previously held their meetings in Burges but have now acquired a building in Antwerp for the same business, further spreading the business idea to neighboring states including Flanders, and later on Ghent and Rotterdam, which equally came up with their trading companies, borrowing a leaf from the Beurzens.
Also developing interest in the activities of the stock market towards the middle of the thirteenth century, the Venice bankers began to trade on government securities, a move which devalued government securities through propaganda, prompting the Venice government to hark down on propaganda carriers in the year 1351. Much later into the fourteenth century, trading was once again reintroduced by the banks in the provinces of Verona, Genoa, Pisa, and Florence.
But for the independent territories governed by an elected citizen council, which were beyond the jurisdiction of a duke at the time, the operations of such trading houses would not have been feasible, following the directives which would have emanated from the government of the said Italian states. This robbed the Italian organization their current position as first to venture into the sale of company stocks, a feat which was only attained in the second half of the sixteenth century by European organizations in the United Kingdom, and subsequently organizations in other nations.
The ability of a stock holder to acquire a fraction of company began in 1602 followed the establishment of the first joint-stock trading company with fixed capital stock, the Dutch East India country. A shareholder became eligible for a certification which held the number of shares (which could exceed one share) of a particular company owned as well as the proof of ownership of same.
Company stocks were on continual trading in the Amsterdam Stock Exchange, where some traders took undue advantage of the system and sold off stocks whose ownerships were unknown at the time, in what was referred to as, short selling. Seen as an illegal practice, short selling was banned in 1610, by the government of Amsterdam.
Currently, the stock market has been replicated in every country across the globe with the Canadian, USA, UK, Netherlander, French, German, Japanese, Indian, South Korean, and Chinese stock markets leading the mantra.
The First Stock Exchange
The New York Stock Exchange (NYSE) has remained the most formidable stock market in America and the world, spanning 1817 to date, although the Philadelphia Stock Exchange stands out as the first stock exchange in America.
On the other hand, the London Stock Exchange, established in 1801, stood as the primary stock market in Europe notwithstanding the ban on the sale of shares at the time. This ban denied the London Stock Market a place at the top of stock market rating in favor of the NYSE, which was rather quick to commence the sale of stocks right upon inception in 1817.