Bulls, bears and investment firms all play a role in the stock market. But for many people, the idea of investing their hard-earned money in the stock market can seem like listening to a foreign language. Luckily, modern technology makes it easier to participate in the market than ever before.
The stock market is a network of marketplaces that brings together investors and traders who buy or sell shares in publicly owned companies. When private companies first make their shares available to the public, they do so through a process called an initial public offering. A share represents a small portion of the company; large public companies often have millions, even billions, of shares in circulation. A share’s price changes based on demand and supply. Buyers offer a “bid,” or the highest amount they’re willing to pay, and sellers offer a “ask,” or the lowest amount they’re willing to accept. The difference is known as the bid-ask spread.
When the stock market goes up, it’s usually a good sign that the economy is growing. But the market can also go down for a variety of reasons, including high unemployment or a slowing economy. Investors may also sell stocks to take profits or because they’re losing faith in a particular industry.
The stock market is a vital part of the global economy, and its moves influence everyday lives for millions of Americans. For example, a healthy market can drive technological advances like smartphones and new medications that require billions of dollars in research and development.
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