What is stock market ?

The stock market is an organized market where buyers and sellers meet to trade financial securities, such as stocks, bonds, or derivatives. It plays a crucial role in the economy by allowing companies to raise funds to finance their growth and investors to grow their capital.

What is the purpose of the stock market ?

The stock market fulfills several major functions in the economy:

Financing companies:

Companies can issue stocks or bonds to obtain the capital needed for their development, such as launching new products, geographic expansion, or investing in infrastructure.

Providing investment opportunities:

Investors, whether individuals or institutions, can purchase securities to achieve financial gains through capital appreciation or dividends.

Economic indicator:

Stock market indices, such as the CAC 40 in France or the Dow Jones in the United States, reflect the general economic health and investors' expectations for the future.

Liquidity:

Stock markets allow investors to quickly sell their securities, providing great flexibility.

Stock market participants

Many participants interact in the stock markets:

Listed companies:

They offer stocks or bonds to raise funds.

Individual investors:

These are individuals who buy securities to grow their savings.

Institutional investors:

These are major players such as pension funds, insurance companies, or banks.

Intermediaries:

Brokerage firms, online brokers, and trading platforms facilitate transactions.

Main products traded on the stock market

Stocks:

Buying a stock means becoming a co-owner of a company. Investors can benefit from dividends and capital appreciation.

Bonds:

These are loans issued by companies or states. By purchasing a bond, the investor receives fixed interest payments until maturity.

Derivatives:

These allow investors to bet on the evolution of an underlying asset (stocks, commodities, indices) without owning the asset itself.

ETFs (Exchange-Traded Funds):

These products allow investment in a set of stocks or bonds, offering diversification.

Why invest in the stock market ?

Grow your savings:

Stock markets often offer higher returns compared to other savings options like savings accounts.

Protect your capital against inflation:

Stocks and certain market products can offset the loss of purchasing power due to inflation.

Diversify investments:

The stock market offers a variety of products to spread risk.

Risks associated with the stock market

Investing in the stock market is not without risk. Here are the main dangers:

Volatility:

Security prices can fluctuate rapidly, leading to significant losses.

Risk of capital loss:

Unlike guaranteed investments, it is possible to lose all or part of your investment.

Company-specific risk:

A company can lose value or go bankrupt, impacting the value of its shares.

These informations are provided for informational purposes only. We strive to provide accurate and up-to-date data, but we do not guarantee the accuracy of the information.
They do not constitute investment advice or recommendations in any way. Users should consult a professional advisor before making any financial or investment decisions.
Investing in assets involves significant risks, including partial or total loss of capital.