Brief Discussion about stock market

How Stock Exchange Benefits the Economy | 7th Generation Advisors

The stock market or share market brings the buyers and sellers of shares, securities or any kind of financial instruments on the same platform. The purchasers and sellers deal with the securities which are listed on the stock exchange market. They deal with the share of the private company also. Stocks can be categorically differentiated on the basis of its domicile.

Early History of the stock market:

In the 12th century France dealt with debts of agricultural communities. Because they traded with debts. They were called brokers initially. In the middle of the 13th century Venetian bankers started trading with government securities.

At first the Dutch East India Company started trading in 1609 in Amsterdam. Later in 1607 the company started its operation with dividends.

Types of stocks:

There are four types of stocks in the market. They are growth stocks, dividend aka yield stocks, new issues and defensive stocks.

If someone wants to buy growth stocks, it has to understand that they are buying it for capital growth not for getting dividends. This share is launched by the company whose earnings are higher than average. It is alluring but at the initial growth period of a company it is not easy.

Yield stocks are being bought when the investor searches income and stability.  The stocks are performed well in the bull markets while giving protection to the investor at the bear market. The stock yield is calculated based on yearly dividends payment by the company to the company’s share price.

New issues is the another name of initial public offering (IPO) .The IPO is launched on the market by the company when it wants to be enlisted in the share market. Once it comes in the market the people start to buy and sell which they find attractive.

Defensive stock entitles to defend their investor. It gives dividends to the investors constantly. When the market condition is not well, it does not go down very much. Throughout it gives a stable earning. This kind of stock is also known as non-cyclical stocks. Because these companies deal with products which are not correlated very much with the economic cycle such as food, oil.

How the stock market works:

Stocks represent ownership of equity in the company for which the shareholders have voting rights in the form of capital gain and earning dividends. The buyers and sellers place orders that determine the price of shares in the market.


If someone is afraid of investing in the share market at, this is not a weird thing. It is true that investing in the stock market carries risk and uncertainty. Most of the rich people invest in the stock market. But if someone proceeds with discipline, it will enhance his net worth.


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