What is the stock market?
Ownership shares in many large companies (over 3000 companies in the United States alone) are traded back and forth over computer networks and in a number of physical locations on a daily basis. These ownership shares are referred to as shares of stock, and collectively, this buying and selling activity is referred to as the stock market. Companies that register their shares with the government to trade in the stock market are known as public companies. Public companies are required to provide certain financial and operational information to the government that is then made available to the general public.
Contrary to what many people believe, when you invest in the “stock market” by buying the shares of individual companies, in most cases, you are not giving money to that company. You are merely buying shares of that company previously owned by someone else. A company can raise money through selling shares directly to the public, but this is usually done through a special offering of stock that we will discuss later.
Glossary of Terms
Whereas shares are units of ownership in a company, stock is simply a collection of shares. Shares of stock are traded daily on the stock market.
The stock market, or stock exchange, is where the buying and selling of shares of publicly-held companies happens worldwide.
Companies that register their shares with the government to be traded in the stock market are known as public companies. You can buy shares of stock in any public company.