The stock market is a place where anyone can buy or sell fractional ownership of publicly traded companies. Hundreds of millions of people participate in the market each day, negotiating prices with each other and influencing the value of shares based on their buying and selling decisions. In the long run, demand for a particular company’s stock is typically driven by its profitability and the goods or services it provides to customers.
Each trading session, the stock market pairs stock sellers with interested buyers. These sellers may be companies that have just gone public through an initial public offering (IPO), or they could be current stockholders looking to resell their shares in exchange for cash. Whether on the floor of the New York Stock Exchange or through an online trading platform, all trading takes place through intermediaries who match a buyer’s bid price with a seller’s ask price. When a match is made, the sale goes through.
For many investors, the goal is to grow their wealth over time. This is why it’s important to have a well-diversified investment portfolio, including stocks and mutual funds. Many investors choose to track a particular index, such as the Dow Jones Industrial Average or the S&P 500, which reflects the performance of the largest U.S. companies.
The stock market is regulated by the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA). These agencies create rules to protect investors, prevent fraudulent activities and ensure fairness for all market participants.