what is a stock market?

*Lexi*: what is a stock market?
my friend told me to “invest in a stock market” for some money and i am like “what the hell?” i have heard of them but i have no idea what they are. thanks! does entering sweepstakes get you fast cash?

Answers and Views:

Answer by triviadude318
A stock market is where shares (part ownership) in companies are bought and sold. I am oversimplifying here but basically when a company makes money, you make money. However, there is risk involved. There is no guarantee that the stock of the company will go up. You can lose your investment.

Sweepstakes are a waste of time.

If you don’t know much about the stock market, don’t get involved unless your company has a 401K plan. If your company has a 401K plan, then they will usually allow you to put in a certain amount of your paycheck into a stock fund and they will match it.

If your employer doesn’t have a 401K plan, then I would recommend that you just put your money in a savings account, or a checking account that pays interest. You can also buy CD’s (certificates of deposit–but your money will be tied up until their maturity date–when you get your money plus the interest). Savings account, interest checking, CD’s, are all insured by the government (FDIC) so there is no risk of you losing your money.

Answer by asker
The word stock simply refers to a supply. You may have a stock of T-shirts in your closet, or a stock of pencils in your desk. In the financial market, stock refers to a supply of money that a company has raised. This supply comes from people who have given the company money in the hope that the company will make their money grow.
A market is a public place where things are bought and sold. The term “stock market” refers to the business of buying and selling stock. The stock market is not a specific place, though some people use the term “Wall Street”—the main street in New York City’s financial district—to refer to the U.S. stock market in general.
Why Companies Issue Stock…

If a company wants to grow—maybe build more factories, hire more people, or develop new products—it needs money. It could get a loan from a bank. But then it would owe money. By issuing stock, a company can raise money without going into debt. People who buy the stock are giving the company the money it needs to grow.
Not every company can issue stock. A business owned by one person (a proprietorship) or a few people (a partnership) cannot issue stock. Only a business corporation can issue stock. A corporation has a special legal status. Like a school, its existence does not depend on the people who run it. Under the law it is separate from the people associated with it, and has special legal rights and responsibilities as well as its own unique name.
…And Why People Buy It
Owning stock in a company means owning part of that company. Each part is known as a share. If a company has issued 100 shares of stock, and you bought one, you own 1% of that company. People who own stock are called stockholders, or shareholders.
Stockholders hope the company will earn money as it grows. If a company earns money, the stockholders share the profits. Over time, people usually earn more from owning stock than from leaving money in the bank, buying bonds, or making other investments.

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Answer by ALAN S
“a stockmarket is where you find the socalled best price’s on this and that . it’s usually controlled by who ever run’s your area you live in ? from alan tiger . “

Answer by Nick
typically when referring to a stock market, people are referring to the secondary equity markets.

Basically its an ‘orderly’ system where equities (legally ‘ownership’ of a company, but unless if you have a significant portion of shares, its just a piece of paper) are traded (bought and sold).

You have to do this through a registered stock broker.

There are also bond (debt) markets, primary markets (Initial Public Offerings) and OTC (Over the Counter). OTC or ‘pink sheets’ are companies that are too small to be listed (or have been de-listed) from the main exchanges (AMEX, NYSE, NASDAQ). Typically pink sheets are associated with ‘penny stocks’ (stocks < $ 1)… and 'pump and dump schemes' (you'll get spam emails saying why this penny stock is going to DOUBLE blah blah blah, then the guy who sent the spam email sells his penny stocks to unsuspecting investors).

Basically the stock market is the greatest legal ponzi / pyramid scheme in the world… 😉