Stock Market

We all use small businesses like the corner shop or local hardware store—and big corporations like supermarkets and car companies. If the small businesses want to expand, they will either self-fund or borrow the money from the bank, which will secure the loan on the borrower's home or other assets. The small business owner takes all the risk of success or failure until they reach a size where they can attract external investors willing to risk their money. If they are big enough, they can go Public, which means they can offer shares in their business to the Public on the stock market.

The Stock Market is where more prominent companies raise capital for their companies. Small companies start in the small capital section, and as they grow, they move up into different capital markets. For example, the top 250 companies in the U.K. stock market are listed on The FTSE 250, and the largest companies by value are listed on the FT100.

Most countries have a stock market as part of their financial system, which helps maintain a healthy national economy. At the time of writing, the only countries without a stock market are Afghanistan, Andorra and Belize.

A stock market is essential to a country's financial system as it allows businesses to raise funds to grow. Most countries allow foreign individuals and companies to invest, with varying degrees of rules and restrictions. 

International investment and trade benefit business and international development as countries have different skills or materials. International rules and laws protect investors, making stock market investments relatively safe. But always seek advice from a regulated professional before investing. 

Allowing private and corporate investment into companies is an efficient way to help businesses grow while letting investors benefit. Investments in the stock market tend to outperform deposits in banks and inflation. 

Investors will invest in companies listed on the stock market by buying a share of that company. If one shareholder owns 51% of a company, they usually have control. Always be aware of who has control of your investment.

Private investors often need more business experience, so they employ the services of a stockbroker or fund manager to manage their investments for them in return for a fee or commission. The manager will be responsible for researching and monitoring the individual share and advising when to buy or sell.

Private or employer pension schemes usually invest their money into shares in the stock market. As the companies' value grows, so should your fund's value. However, many Asset Management companies now offer different types of investments, not just pensions.

One should always be cautious when investing in the stock market, as you can quickly lose money. You should continually educate yourself first and seek a regulated professional's advice. 

Stock market investing has, over time, become complex as professionals seek new ways to make money. This complexity can be daunting for the novice investor. The professionals invest not only in businesses they believe will rise in value but also in those they think will go down. 

The more money invested in a company, the more likely its shares will increase in value, but conversely, if a high number of shares are sold, the value is likely to fall, simply supply and demand. However, this knowledge makes it possible for professional market makers to manipulate the markets, so the rise and fall in value depend not just on how successful a company is. Unless you know what you are doing, always seek a regulated professional's advice.

Bull and Bear markets, you will hear these terms frequently and its nothing to do with the buying and selling of animals. A Bull market is a rising market, while a Bear market is a falling one. 

Conclusion

In conclusion, stock markets are where people with money to invest go along with businesses that need to raise capital. Matches are made between buyers and sellers. Sellers will make their company's proposition attractive to investors as they want the money to grow their businesses. However, some business owners wish to sell a proportion of their shares to release capital personally. So always be aware of who is selling their holdings within the owner management, as this may indicate something negative. When investing money, knowledge is power.

The stock market is exciting, like the race track or the casino; this is an extreme example, but hopefully, it will focus your mind. If you bet on the favourite horse in the race, the odds/returns, if it wins, will be low. If you invest in the outsider, the odds/return will be higher. You never meet a poor Bookmaker, Stockbroker or Fund Manager! Always seek professional advice.

Generally, a well-managed portfolio should outperform bank deposits and inflation.