How the Stock Market Works in 5 Minutes

The Stock Market seems like a complicated
beast. It’s a place where it
seems like money is made or lost from nothing. What’s strange is that there is actually
nothing physical that happens in the stock market. When a stock gains or loses value nothing
visible is happening – but the effect of such a change in valuation can have a great
impact on the world. Every single day at the New York Stock Exchange
over $169 billion dollars’ worth of securities are traded. This is only one of the stock exchanges around
the world, not to mention all the other kind of exchanges that exist as well. How though does such a market work. Just like any market, the stock market involves
buying and selling. However, unlike the farmers market where you
are buying and selling actual goods, in the stock market something called securities are
being bought and sold. Securities are basically financial assets
like stocks and bonds. When you buy a security like
a stock you are actually purchasing part of the company that that stock is part of. In the old days you would get an actual piece
of paper that shows you how much you own. These days however, all that information is
digital. So for example let’s say you want to invest
your money in Google. One way of doing that is to buy a share of
Google stock. By buying that share you are purchasing a
part of Google. You can think of it as being a part owner
of the company – whether you own one share or multiple shares. When you want to sell a security for example,
you have to find a buyer. You would do this through a registered stock
broker. These guys take your stock and look for a
buyer who is willing to buy your stock at a certain price. When they find another person willing to buy
they sell your stock. They then charge you a fee for the transaction. The same basic operation happens when you
want to buy a stock. Millions of transactions like these happen
every day all around the world. This is why the prices of stocks go up and
down. The price of a stock generally goes down because
sellers are willing to sell at a lower and lower price or when a buyer is only willing
to buy at lower and lower prices. This could happen when there is bad news about
the company or the market as a whole. People get scared and try to protect their
losses by selling their stocks. The price of a stock goes up when buyers become
willing to buy stocks at higher and higher prices – pushing the price up. That’s the basics of
the stock market. Money is made from the speculation of money. It’s that simple.

40 thoughts on “How the Stock Market Works in 5 Minutes”

  1. your videos are awesome, keep doing great videos like these and only change the format if necessary you know don't fix what isn't broken. I'm sure you'll make it big here

  2. Stock holders do not always know what the future will be of a company, people will inappropriately react to reports of a company, and get rid of there stock, and some stockholders will try to influence the business decisions of a company that turn out to be a bad move. This is just what little I have gathered as an ignorant bystander over the years.

  3. Securities are
    Real estate

    Stocks go up and down because people sell and buy it for higher/lower prices

  4. I love how you miss so many important details about stocks. You never covered dividend growth, dividend distributions, why holding stocks make you compound interest; nor, have you covered the difference between blue chip stocks, bonds, or ETF's, so that people can make informed decisions about the market. This video makes it seem scary, like as if your only choice is to buy and sell, when in fact, ownership of a company can actually yield high dividends, and also pay you a ton of money!

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  6. Wait, When I buy stock outside of an IPO, I've bought it from a seller, who likely bought it from another seller. The company doesn't enjoy any of the money from when I bought it. The company I own a part of only got the money from the IPO. The value of a stock is the PERCEIVED concept of a companies value.

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  11. My video on what a stock is quickly and easily explains what is going on. If you want to learn about the basics of a stock, I'd recommend coming on over to my channel!

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  13. Your videos are good but you talk too slow. I know your trying to sound calm and clear, but it comes off as dull and unconfident.

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  18. If the wall St Is earning billions a Day how. Could the world is still on poverty and financial surge. Where does the billion money Go away?

  19. When you talk about setting the price. How r u setting the price for a share the is already at a set price whether buying os selling? Thanks

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