The stock market is an aggregation of buyers and sellers and of stocks. Stocks are everywhere around us!
They are all of the shares into which ownership of the corporation is divided! So let’s find out some more things about their market!
- A stock market, equity market or share market is the aggregation of buyers and sellers of stocks
- Also called shares
- Which represent ownership claims on businesses
- An aggregation is a loose network of economic transactions
- Not a physical facility or discrete entity
- The stocks may include securities listed on a public stock exchange
- As well as stock that is only traded privately
- Examples of the latter include shares of private companies
- Which are sold to investors through equity crowdfunding platforms
- Stock exchanges list shares of common equity
- As well as other security types
- For example corporate bonds and convertible bonds
- Stocks are categorized in various ways
- One way is by the country where the company is domiciled
- For example, Nestlé and Novartis are domiciled in Switzerland
- So they may be considered as part of the Swiss stock market
- Although their stock may also be traded on exchanges in other countries
- For example, as American depository receipts (ADRs) on U.S. stock markets
- As of 2017, the size of the world stock market was about US $79.225 trillion
- By country, the largest market was the United States (about 34%)
- Followed by Japan (about 6%)
- And the United Kingdom (about 6%)
- These numbers increased in 2013
- As of 2015, there are a total of 60 stock exchanges in the world
- With a total market capitalization of $69 trillion
- Of these, there are 16 exchanges with a market capitalization of $1 trillion or more
- And they account for 87% of global market capitalization
- Apart from the Australian Securities Exchange, these 16 exchanges are based in one of three continents
- These continents are North America, Europe and Asia
- Market participants include individual retail investors
- Institutional investors such as mutual funds, banks, insurance companies and hedge funds
- And also publicly traded corporations trading in their own shares
- A few decades ago, most buyers and sellers were individual investors
- Such as wealthy businessmen, usually with long family histories to particular corporations
- Over time, markets have become more “institutionalized”
- Buyers and sellers are largely institutions
- The rise of the institutional investor has brought with it some improvements in market operations
- There has been a gradual tendency for “fixed” (and exorbitant) fees being reduced for all investors
- Partly from falling administration costs
- But also assisted by large institutions challenging brokers’ oligopolistic approach to setting standardized fees
- A current trend in stock market investments includes the decrease in fees
- Due to computerized asset management termed robo-advisors within the industry
- Automation has decreased portfolio management costs
- By lowering the cost associated with investing as a whole
- Stock market participation refers to the number of agents who buy and sell equity backed securities
- Either directly or indirectly in a financial exchange
- Participants are generally subdivided into three distinct sectors
- Households, institutions, and foreign traders
- Direct participation occurs when any of the above entities buys or sells securities on its own behalf on an exchange
- Indirect participation occurs when an institutional investor exchanges a stock on behalf of an individual or household
- Indirect investment occurs in the form of pooled investment accounts, retirement accounts
- And other managed financial accounts
- Tobias Preis and his colleagues Helen Susannah Moat and H. Eugene Stanley introduced a method to identify online precursors for stock market moves
- Using trading strategies based on search volume data provided by Google Trends
- Their analysis of Google search volume for 98 terms of varying financial relevance suggests that increases in search volume for financially relevant search terms tend to precede large losses in financial markets
