A typical dictionary definition for stock is (the capital raised by a corporation through the issue of shares entitling holders to an ownership interest (equity); "he owns a controlling share of the company's stock").
Stocks are usually explained to be a collection of shares in a company,and are also referred to as stock shares. A stock is a certificate (sheet of paper) declaring you own a small fraction of that company (corporation). To explain further lets look at some of the reasons for why a company might want to issue stock. A company issues a stock so that it might use the money from a stock offering to buy equipment, hire people, advertise, or expand facilities. Basically, stocks help companies grow
Trading in stocks on the stock market is typically driven by speculation, based on company news and performance factors. There are two ways to try and find the market value of a stock. Stock value is determined using some type of cash flow, sales or earnings analysis. This form of stock valuation is based on historic ratios and statistics and aims to assign market value to a stock based on measurable attributes. Another way a stock market can be be explained is to ask one to look at how much investor is willing to pay for a particular share of stock and by how much other investors are willing to sell a stock for. In other words, it explains the market’s supply and demand. This form of stock valuation is very hard to understand or predict, and it often drives the short-term stock market trends.
In 1865, the New York Stock Exchange opened its first permanent headquarters near Wall Street in New York City. The irony of stock market is that companies live and die by their stock price, yet for the most part they don't actively participate in investing and in trading their stocks within the market. Companies get funds from the securities market when they first sell a security to the public in the primary market, commonly referred to as an initial public offering (IPO). In the subsequent trading of these shares on the secondary market (what most refer to as “the stock market”), it is the average investor exchanging the stock who benefits from any appreciation in stock price. Fluctuating prices are translated into gains or losses for these investors as change of ownership of stock takes place. Individual traders investing in the market acquire the full capital gain or loss after transaction costs. The original company that issues the stock does not participate in investing and taking of any profits or losses resulting from these transactions because this company is not supposed to have any monetary interest in stock market transactions.
From the start there was not need to explan that individuals couldn’t realistically be buying shares of stock directly from the company. Stock market brokers have facilitated the obstacle of individual buyers dealing with companies issuing the stock. A stock broker is someone who performs transactions in stock on a stock market as an agent of their clients who are unable or unwilling to trade for themselves. A firm that buys stock from the company and resells it to the investors is known as the underwriter.
Technology and internet have made investing in the stock market incredibly accessible to the mainstream public. Electronic trading began to grow in popularity by mid 1960s and by 1968 NASD (National Association of Securities Dealers) created the National Association of Securities Dealers Automatic Quotation System or NASDAQ. The trading floor of the ‘new stock market’ is now virtual computer space driven by 21st-century technology that makes investing in stock market EASY. The new technology brings news and other info to the investor, and stock trades can now be done from around the world at lightning speed. Internet stock market trading continues to grow and a special study by the SEC found that as of the second quarter of 1999 there were 9.7 million investors with online trading accounts.
