Posted on Saturday, 14th March 2009 by admin
A stock market, also called stock exchange is the place where buyers and sellers of stocks will do transactions. There are physical places such as the New York Stock Exchange (See image below) but you can also have access to buy stocks online through an online brokerage account (this will be discussed in a later post).
Picture a regular fruits & vegetables market where people are selling and buying. Depending on the season (economic cycle), you will find rebates on specifics items (which we call undervalued stocks). When there is a rumor that products big be infected by a bacteria (or toxic financial products and subprime for example), the price of everything will drop, even the good fruits and vegetables (and the good company stocks!).
As you can see, a stock exchange is very similar than any other type of markets. Buyers and sellers determine a price they judge fair for a specific stock at a specific time. It doesn’t really mean that the stock worth the price of the transaction, it simply means that 2 individuals agreed on a specific price. So every time you are about to sell a stock because you think it’s not worth it, someone else (the stock buyer) thinks it is undervalued at that price!
The major stock exchanges in North America are the following:
USA:
New York Stock Exchange (NYSE): this is where most US company stocks are traded. We usually refer at the S&P 500 as the biggest 500 companies listed on this stock exchange.
National Association of Securities Dealers Automated Quotations NASDAQ: This is the first automated system that allows traders to get quotes electronically. Famous and fast growing company Google is on this market.
American Stock Exchange (AMEX): The AMEX has been bought by the NYSE Euronext, the company operating the NYSE.
Chicago Board Option Exchange (CBOE): You can trade US stock options on this market.
Canada:
Toronto Stock Exchange (TSE): this is where you will find all major Canadian company stocks such as RIM, Canadian Banks, Power Corporation, etc. Its main index is the S&P TSX.
Montreal Stock Exchange (ME): you can trade Canadian options on this market
Image source: NY Times
Posted in Stock Markets | Comments (1)
April 11th, 2009 at 12:57 pm
Great post very informative and I will be linking back to your site from mine.