What is a Stock Market?
Stock markets are venues where buyers and sellers meet to exchange equity shares of public corporations.
—Investopedia
Stock markets help companies trade publicly to raise capital. Stock Market is a marketplace where companies get their shares listed by launching an IPO. It allows individuals and institutions to invest and own a portion of the company.
The two major stock exchanges of the U.S. are New York Stock Exchange and Nasdaq.
As an individual investor, you can buy and sell stocks on the stock market through a broker. A broker is a financial professional or a brokerage firm that acts as an intermediary between you and the stock market. Usually, people open brokerage accounts with their bank.
Online brokers have made buying and selling stocks easier and more affordable for individual investors. Many online brokers offer low commission fees and user-friendly trading platforms that make researching and trading stocks easy.
For more info on this, talk to your bank or financial advisor.
SEC – Securities Exchange Commission
The SEC or securities exchange commission is the regulatory watchdog of the US stock market.
Role: The role of the SEC is to protect investors from fraudulent companies.
How: SEC has specific rules and regulations which companies need to abide by and get categorized into before being listed in the stock market. The SEC tries to maintain efficiency and fairness in the market.
MR Market
Mr. Market is an imaginary character introduced by Benjamin Graham and introduced in his book- The Intelligent Investor.
The idea behind Mr. Market analogy is that the whole stock market can be thought of as a person named Mr. Market who constantly offers to buy or sell stock every day at different prices. Mr. Market is a good guy but suffers from wild mood swings. Some days, Mr. Market gets happy when the sun is shining(optimism) and offers a good price for stocks. On the other days, he feels afraid when there are little clouds(fear) and offer lower prices for the same stocks. He has the power to control the prices of each stock listed for the short term.
As an investor, it’s important to understand that the stock market’s volatility is normal and expected because it depends on the MR Market mood swings.
Now, our objective is to:
1) Identify what the company is worth
2) Wait for Mr. Market to have a bad day and buy it at a significant discount.
Key Takeaway
An investor must understand this and make investment decisions based on a company’s fundamentals rather than being swayed by Mr. Market’s mood fluctuations.
Stock markets are venues where buyers and sellers meet to exchange equity shares of public corporations.
—Investopedia
Stock markets help companies trade publicly to raise capital. Stock Market is a marketplace where companies get their shares listed by launching an IPO. It allows individuals and institutions to invest and own a portion of the company.
The two major stock exchanges of the U.S. are New York Stock Exchange and Nasdaq.
As an individual investor, you can buy and sell stocks on the stock market through a broker. A broker is a financial professional or a brokerage firm that acts as an intermediary between you and the stock market. Usually, people open brokerage accounts with their bank.
Online brokers have made buying and selling stocks easier and more affordable for individual investors. Many online brokers offer low commission fees and user-friendly trading platforms that make researching and trading stocks easy.
For more info on this, talk to your bank or financial advisor.
SEC – Securities Exchange Commission
The SEC or securities exchange commission is the regulatory watchdog of the US stock market.
Role: The role of the SEC is to protect investors from fraudulent companies.
How: SEC has specific rules and regulations which companies need to abide by and get categorized into before being listed in the stock market. The SEC tries to maintain efficiency and fairness in the market.
MR Market
Mr. Market is an imaginary character introduced by Benjamin Graham and introduced in his book- The Intelligent Investor.
The idea behind Mr. Market analogy is that the whole stock market can be thought of as a person named Mr. Market who constantly offers to buy or sell stock every day at different prices. Mr. Market is a good guy but suffers from wild mood swings. Some days, Mr. Market gets happy when the sun is shining(optimism) and offers a good price for stocks. On the other days, he feels afraid when there are little clouds(fear) and offer lower prices for the same stocks. He has the power to control the prices of each stock listed for the short term.
As an investor, it’s important to understand that the stock market’s volatility is normal and expected because it depends on the MR Market mood swings.
Now, our objective is to:
1) Identify what the company is worth
2) Wait for Mr. Market to have a bad day and buy it at a significant discount.
Key Takeaway
An investor must understand this and make investment decisions based on a company’s fundamentals rather than being swayed by Mr. Market’s mood fluctuations.