The Stock Market

• In general, the stock market is the method by which stocks are bought and sold.
• Several exchanges exist on which to buy and sell stocks:
  • NYSE ~ The New York Stock Exchange is one of America’s oldest and largest stock exchanges
  • AMEX ~ The American Stock Exchanges is also a nationwide exchanges.
  • NASDAQ ~ This acronym means the National Association of Securities Dealers Automated Quotations. It is an electronic stock exchange, existing on the computer systems of stock traders across the United States.
• Again, a variety of factors affect a stock’s price, and on the exchange, price movements are determined by demand (the amount of people wanting to own a company) and supply (the amount of people willing to sell their ownership in a company).
• Many other countries around the globe have their own stock markets, so stocks are being bought and sold nearly 24 hours a day!
• To track the performance of the stock market, we use indexes. Some of the most widely followed include:
  • DJIA ~ The Dow Jones Industrial Average is a group of 30 of America’s biggest and best companies, companies deemed most representative of U.S. industry.
  • S&P 500 ~ Standard & Poor’s lists their opinion of the 500 leading companies in this popular index.
  • NASDAQ ~ The NASDAQ indexes all companies on its exchange and represents many of the smaller or newer companies traded in the U.S.
• Historically, the stock market has earned higher returns than bonds or savings deposits; however, investing in stocks carries a greater risk, with no guarantee your money will be returned.