Are you thinking about getting into the stock market? If you are, you might benefit from knowing some stock market facts before you take the plunge.
On average, nearly $200 million is traded every day on the New York Stock Exchange. Fortunately, to get started you don’t need to worry about investing millions! But a little history, some insightful facts, and some hints and tips won’t go amiss.
To help you get started in the stock market, here are some interesting stock market facts for beginners.
What Is the Stock Market?
The stock market is the platform through which people buy and sell stocks in companies. In general, when people refer to the stock market they are referring to one or more of the major indices. These indices include the S&P 500, the Dow Jones Industrial Average, the Nasdaq, and the New York Stock Exchange.
The stock market is a tracking system. The stock market offers a “place” for traders to buy and sell stocks and it tracks the effects of those trades.
To make a trade on the stock market a trader works through a broker rather than handling things themselves. This market is also not like a regular store because it’s only open 9:30 am EST to 4:30pm EST!
How Does the Stock Market Work?
As noted above, the stock market helps traders buy and sell shares, or stocks. The exchanges offer stocks to investors. As investors buy and then sell those stocks the exchanges monitor and post the value of the stocks.
The exchanges monitor the supply and demand, controlling the trades so that there is a fair and equal system for all investors. Algorithms set by the exchanges allow buyers and sellers to find a suitable price at which to complete the trade.
Those trades are initiated when a buyer offers what is called a “bid” to a seller. The bid is the highest per-share price the buyer is willing to offer. The bid is almost always lower than the seller’s price, which is known as the “ask.”
The difference between the two prices must be negotiated by the buyer and seller. They negotiate what is called the “bid-ask” spread. When they find an acceptable point in the spread the trade can go through.
How Did the Stock Market Begin?
Stock markets can be traced all the way back to the 1300s. At that time, in Venice, Italy, people who loaned money to others started a basic stock market. The “market” sold debts to other lenders or people who wanted to purchase these loans in order to make money themselves.
By the 1500s, Belgium had an exchange, or stock market, that traded debts, bonds, and promissory notes. However, there were no stocks traded as we know them today.
The rise of the East India trading companies in the 1600s led to a more recognizable stock market. These companies started the practice of selling paper notes that would be paid out in a dividend when a shipment made it to its destination.
There was no actual exchange in England to handles these trades, however. It would take until 1773 before the first stock exchange came into existence in London. By 1791, New York had its own stock exchange, too.
The New York Stock Exchange immediately took up residence on Wall Street in New York City, where it remains to this day. It chose that location because it was close to the banks and the waterfront where much of the city’s business and trade was done at the time.
What Is the NYSE?
The NYSE, or New York Stock Exchange, is the biggest stock market in the world. It’s still located on Wall Street in New York City, more than two hundred years after it started. It is famous for the ringing of the morning bell signifying the start of trading.
Fun Stock Market Facts
- Technology companies represent the biggest chunk of the stock market.
- 55 percent of Americans own stock
- The single best day of trading on the Dow Jones Industrial Average was March 15, 1933
- The single worst day of trading on the Dow Jones was October 19, 1987.
- If Apple founder Ronald Wayne had kept his 10 percent share in the company rather than sell it in 1976 for $800, those shares would be worth more than $35 billion today!
- Women started working on the stock market during WWII, but it wasn’t until 1965 when women were permanently allowed to work on the trading floor.
- Cryptocurrency is now something you can trade on stock markets. Learn more about the top eToro traders.
Bull and Bear Markets
These terms describe a market that is doing well and one that isn’t. A bear market is one in which the stock prices are falling rapidly. A bull market is one in which stock prices are on the rise.
Typically, throughout history, bull markets tend to last longer than bear markets, which is good news for investors. The last bear market was in 2007. They can both be indicators of larger economic trends.
Stock Market Crashes
One of the interesting stock market facts is related to the occurrence of crashes. Crashes don’t occur very often. A crash is considered to happen when on one day the market experiences a large drop in the price of shares.
If you’re starting to invest in stocks and you’re worried about crashes it’s best to think in the longterm. Crashes do happen from time to time but you’ll likely be able to recover if you’re in for the long haul.
Diversification
Keep in mind this entry on the list of stock market facts: diversification of your portfolio will help you if a crash does happen or a bear market sets in.
A stock portfolio without diversity will be subject to increases and decreases in that sector. This means your overall gain or loss could be affected much more than if you have a diverse set of stocks.
Stock Market Facts to Help You Get Started
If you want to get into the stock market there are a lot of technical and financial things you need to consider. But, as you can see from this list of stock market facts, there is also some great history and some fun things to learn about.
From strange names to exchanges to tales of missed opportunity, the stock market has enough to keep us all interested no matter how much we have invested. As you get started in the stock market, keep in mind the basic information here.
Remember, you can be a fortunate investor. Visit our website to get great tips on how to invest in stocks.