Q: What is the stock market?
Q: Hi Alex! I am constantly hearing that I should be investing, or in the stock market, but no one has ever explained what the stock market is, and at this point I feel too far behind to ask. But we were told to ask any question about it, so my first question for you is: what (actually) is the stock market?
A: Hey! I’m so glad you reached out with this one. When it comes to finances, it’s easy to feel like you missed something in school or in life, but the reality is that Financial Education is hard to come by. There’s not typically a required class along the way, and a lot of what you can learn in self-research ends up being mysterious financial jargon. I’m sure you aren’t alone with this question, and I’m excited to be answering it.
First and foremost — the stock market isn’t necessarily a physical marketplace. Rather, the ‘stock market’ people talk about is the collective way to buy and sell shares of stock of publicly traded companies. There are also other types of securities than just stock that can trade on stock markets, like Exchange Traded Funds for example.
The stock market in the US is made up of several stock exchanges, such as the New York Stock Exchange or Nasdaq. These exchanges are where buyers and sellers of stock or other securities are matched up to complete trades on the stock market. While the ‘exchanges’ you may have heard about like the New York Stock Exchange can indeed have physical headquarters, they are simply the part of the stock market that enables people to buy and sell (or, “trade” as you often hear it called).
In the stock market, investors can trade various types of securities (such as stocks) in a secure and transparent environment. Investors can track the (often changing) prices of specific stocks, as well as the entire market overall. When looking at stock performances, you may come across “stock tickers”, which look like red or green codes. These tickers track the latest price changes of specific securities, and you can learn how to read them here on our blog.
Investors can buy and sell stocks on the stock market with the help of a brokerage firm, which is a financial institution that allows folks to trade stocks. Examples of brokerage firms include Fidelity, Charles Schwab, and even Bumped– although we’re quite different from most, since we offer a new way to get started in the market through free stock rewards, promoting ownership over stock trading.
We’re here to help make investing more accessible, as we understand the stock market can be an entirely new system to learn for investors of all experience levels. We hope this brief introduction to the stock market helps, and send us a message if you have any more questions!