If you’ve ever been involved in investing or just watched the investing that occurs daily in your own stock market investing, you’ve probably heard the term “marketability.” Marketability refers to how liquid a particular stock is. A stock market, equity or share market, is simply the aggregation of buyers and lenders of shares, which collectively represent ownership interests in companies; these can include publicly traded securities on a national exchange such as the New York Stock Exchange (NYSE) or Nasdaq. One of the most widely quoted stock market terms is the “PE” or “put strategy.” “Put” simply means to purchase a stock that has dropped in price, usually because of news or negative reports about the company.
Why does the stock market work this way? For a simple explanation, investors pay money for shares of stock in order to make a profit when they sell them for a profit. The buyers are known as “buyers” and the sellers are called “sellers.” Over the course of time, there are many different levels of buy and sell prices, depending on demand and supply. When there is strong demand from buyers, the price of a stock will rise. When there is weak demand, then the price of a stock will drop.
It’s important to note that the stock market works in a rather odd way. For instance, the New York Stock Exchange (NYSE) works through a listing system consisting of four main exchanges: The New York Board of Trade (NYBOT), The American Exchange (AE) – the country’s biggest stock market – the Chicago Board of Trade (CBB) and The American Financial Security Exchange (AFS). There are also regional exchanges such as the NASDAQ and the London Broker Dealers’ Association, Ltd. All four of these exchanges list shares for trading on US markets. However, not all the listed companies are included!
Investing in the stock market works much the same way as trading in commodities and stocks. You buy a stock that’s currently rising in price, and then you buy more shares of the same stock. You can hold onto your shares until the company’s price begins to reverse and then sell them off for a profit. Alternatively, you can invest in index funds that allow you to do just that: holding onto the stock prices and waiting for them to go up.
The four exchanges that make up the NYSE, or New York Stock Exchange, include the American Exchange, the NASDAQ, the Chicago Board of Trade, and the London OTCBB. The four differ slightly, but all the major exchanges now allow small investors to trade shares for the first time. This has allowed small investors to become a significant force on the stock market. If you want to invest money in the stock exchange, you must start by investing in shares. You can only invest in shares of these large companies, if you hold their shares in a brokerage account with an investment firm such as Fidelity or Schwab.
Large investors can invest in shares of smaller companies through their individual brokerage accounts. In doing so, they are required to have a minimum investment amount. Although the minimum amounts are typically higher, it is still possible to invest in many stocks with small amounts. Many individual investors also use mutual funds and investment partnerships to hold a variety of stocks. Some investors like to hold shares of several different exchanges, especially because it allows them to stay abreast of the various changes within the exchanges.
A few years ago, investors used to be limited to trading shares in the major exchanges. However, in recent years, new technology has allowed investors to purchase securities directly from brokers, allowing them to access the entire stock markets with a few clicks of the mouse. Many of these brokers will also allow you to open a margin account, allowing you to make larger transactions.
Another great option for those who want to invest but do not want to go public is to invest through a mutual fund. The advantages of mutual funds are their low fees, ability to grow tax-deferred, and diversity among the securities that they hold. They provide a diversified portfolio that is easy to manage and have tax benefits as well. If you don’t currently invest through a mutual fund, you should consider trying it. It may be just what you need to keep your portfolio up to date and in good shape.