The stock market is a system and concept designed primarily for the trading of company stocks or what can also be called collective shares. It is also a system that legally traffics and oversees the movement of other securities and derivatives that might flow from one company to another, on a daily basis. It was set up to measure economic growth, loss and stagnation in a standardized basis.
Aside from stocks and derivatives, bonds are also present when it comes to the stock market. Commonly exchanged through over the counter methods, these bonds are vouchers which assure that the trading companies will get the agreed upon funds at an agreed time, even after the stock market has tilted again. These bonds are effective means of cementing the decision of any buyer or seller to finally obtain or let go of their stocks at a given price.
In most stock markets around the world, the system of operation is fairly similar. It is just a matter of monitoring and decongesting various movements in the market, in terms of closing transactions, personal choices and corporate policies. Most people you’ll see in the stock market centers are brokers and agents. These people do nothing but keep an eye on what’s happening with the companies they are handling. They are the eyes and ears of people who own major and minor percentages of companies from all over the country.
Before the market closes, all traders will seek or get advice and reports from these people. It will be their primary bases on whether to sell or to keep the stocks they have. Most of the time, the stock market is noisy and very busy. After all, it only takes a matter of minutes, or sometimes, even seconds, for certain shares to rise, fall, and then rise again. As such, businessmen and traders are always on the move to sell or buy; whichever they may deem more profitable.
By the end of the day, the total number of losers, non movers and gainers are assessed in order to see how much money was made or lost all over the country for the day. Losers are businessmen and stockholders who let go of their shares for less than the price they obtained it for. Gainers on the other hand are those who were able to sell their stocks for a higher price. Non movers are those who neither sold nor bought. Before the day finally closes, the total stock market is assessed through a standardized point system.
Since the stock market is the melting pot of all transactions, not only in countries but the whole world, it can be said that it is one of the strongest indicators of economic stability or instability. This matter of pertinence is the very reason why all countries all over the world are always trying to keep the stock market in tiptop shape no matter what. As a very crucial point of economic judgment, it can be said that the stock market tends to shake or show volatility at the slightest signs of political, economic or social unrest in any nation.
As of today, it is estimated that the size of the worldwide ‘bond market’ is priced at approximately $45 trillion. With bonds and some other elements included though, it is presumed that today’s market can reach a total of up to $ 51 trillion. World derivatives of the stock market on the other hand have been estimated at around $300 trillion.
Reliable statistics and researches also suggest that today’s stock market is actually ruled upon by America, in terms of getting the lion’s share. As the world’s most powerful nation, major U.S. banks alone are said to own as much as $100 trillion of the total derivatives. This is about a third of all the derivatives in the international stock exchange.
The power of the stock market is also very guarded by all sectors of the country. Neither the private nor the public sector is allowed to meddle with dealings of the stock market. Government institutions that will prevent stock monopoly, insider trading and other abnormal transactions within the market have been set up in every country. This is a safety and security measure in order to keep public trust.
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A good article!
I myself had studied a lot about financial markets and explored the avenues of stock markets as well, but what I learnt from it was all that in this particular field you learn only 5% from books and other literature and rest 95% is what practice in the market tells you.
Regards,
Comment by BlogOxide — August 31, 2007 @ 1:40 pm