The stock market is a central part of modern economies, where companies raise vast sums of money for growth, and individuals invest those funds to possibly make a profit. The markets are also an indicator of the general mood — when times are good, stocks rise; when bad news hits, they fall.
Generally, share prices are determined by supply and demand. If lots of people want to buy a particular stock, that creates a higher demand and drives up the price. At the same time, if lots of people want to sell their shares, that reduces demand and pushes the price down. As a result, buyers and sellers constantly negotiate new prices with each other.
A company’s stock can lose or gain value for many reasons, from a new management team to a product recall. Large changes in the overall economy, from unemployment to war, can also impact stocks. However, for investors, the biggest factor is the underlying performance of individual companies.
Investors can buy and sell shares in a variety of ways, including through mutual funds and exchange-traded funds (ETFs). They may also use online trading platforms. Those who trade securities for their own accounts, rather than working with an investment firm, are known as retail investors. Another key group are institutional investors, such as pension funds and insurance companies. Finally, there are accredited investors, high-net-worth individuals with the money and experience to access more complex investments, like venture capital or private equity.
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