Why Do We Need a Stock Market?

Every day, billions of shares from tens of thousands of companies are traded on stock markets around the world. Although all of this buying and selling is not without occasional complexities, the stock market remains one of the foremost wealth creators in the world.

History

The first modern stock markets were founded in the seventeenth century, with the Amsterdam Stock Exchange and London Stock Exchange. The most famous exchange, the New York Stock Exchange, was founded by the Buttonwood Agreement 100 years after the first stock exchanges.

Significance

The stock market is vital to a country because it ensures expedient access to capital for thousands of companies that would otherwise have a much harder time funding operations, and it allows millions of small investors to participate in the profits of the companies they own.

Features

The primary features of a modern stock market are public companies looking to sell some of their shares to the public, investors looking to buy those shares in anticipation of profit, and stock exchanges that bring companies and investors together.

Function

The stock market functions as a meeting place of millions of investors with different objectives and risk tolerance levels, all converging on a few exchanges to pursue their monetary interests.

Misconceptions

One of the primary misconceptions about the stock market is that it is just a gambling casino. While some people and institutions have treated it like that, many others have treated it responsibly and made great profits through the years, and in the process kept thousands of companies well-funded and operating smoothly.

Resources

• Stock Market History