What Is the Purpose of the Stock Market?

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The purpose of the stock market is to allow companies to raise capital by selling stocks to the public for the benefit of the company and the investor. Find out how some companies sell stocks privately with information from a financial analyst in this free video on the stock market.

Part of the Video Series: Stock Market Tips & Facts
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Video Transcript

I'm Roger Groh with Groh Asset, and today we're here to talk about the purpose of the stock exchanges. I mean, why do they exist? Well, if you think about it, as companies begin to grow, frequently they need more cash to build a new manufacturing facility, or even to buy a competitor. And, one of the ways that they can do that is by selling stock in their company. Now, could they go out and sell that stock directly to you? Yes, they can. Most private companies here in the United States certainly do it that way. However, a great number of companies have decided to sell their stock publicly, and then list those share prices on newspapers and websites, so that their employees and the current shareholders can see how they're doing. It's a way to raise capital, so that they then have more cash to go buy or build whatever their projects are that they feel will benefit their company for the long term. So, that's why they exist. Hope that helps. I'm Roger Groh with Groh Asset and thank you very much for spending time with me.

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