The stock market is a place where shares (or parts) of publicly owned companies are traded for cash. The idea behind it is that if a company grows sales and profits, the value of its shares will increase, allowing investors to sell their shares later at a higher price. There are many different factors that influence stock prices.
For instance, the demand for a particular company’s shares changes over time depending on how well it’s performing, the general state of the economy and other factors that don’t necessarily affect a specific company. The same goes for the supply of a particular company’s shares; if more people want to buy, the share price will rise.
If you’re interested in investing, you can open a brokerage account through a licensed broker, on your own or with the help of an investment advisor. You can then use your account to place buy orders for individual stocks or for groups of stocks, called funds. These include mutual funds and exchange traded funds (ETFs).
The securities industry is regulated by federal and state laws. In the United States, the Securities and Exchange Commission oversees the national markets while the Financial Industry Regulatory Authority, or FINRA, is more focused on protecting retail investors. This regulation helps maintain investor confidence in the marketplace. Publicly traded companies are also required to follow stringent reporting rules, which gives us a better view into how they operate and how well their businesses are doing.