Stock market facts for kids
A stock market is an institution where humans and computers buy and sell shares of companies.
Contents
Shares are small pieces of a company. Shares can be bought by humans, companies, and mutual funds. When buying shares in a company, the buyer owns a small part of that company. The price of a share can be based on many different things. The main thing that affects the price is the balance between supply and demand. If many buyers want to buy a stock the price goes up. If there are more sellers than buyers, the price goes down.
Stock brokers
Some buyers trade shares in stocks through a stockbroker. A stockbroker is a person who buys or sell stocks for their customers. A stockbroker can also help customers make choices in stocks. Their advice is based on public information about the companies.
Advice from stockbrokers
Stockbrokers advise their clients on how to manage their stocks. Some of the advice they give is:
- BUY (good expectation - buy the stock)
- HOLD (neutral expectation - keep the stock)
- SELL (low expectation - sell the stock)
Stock markets in the world
- NYSE (New York Stock Exchange) - USA
- NASDAQ (stock market for mainly technology shares) - USA
- London Stock Exchange - UK
Cultural changes in the stock market
Trading stocks online has become more popular. Stocks can be traded online. There is a fee or commission each time a position is opened.
Images for kids
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The offices of Bursa Malaysia, Malaysia's national stock exchange (known before demutualization as Kuala Lumpur Stock Exchange)
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A 17th-century engraving depicting the Amsterdam Stock Exchange (Amsterdam's old bourse, a.k.a. Beurs van Hendrick de Keyser in Dutch), built by Hendrick de Keyser (c. 1612). The Amsterdam Stock Exchange was the world's first official stock exchange when it began trading the VOC's freely transferable securities (including bonds and shares of stock).
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Courtyard of the Amsterdam Stock Exchange (Beurs van Hendrick de Keyser) by Emanuel de Witte, 1653. The Amsterdam Stock Exchange is said to have been the first stock exchange to introduce continuous trade in the early 17th century.
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Established in 1875, the Bombay Stock Exchange is Asia's first stock exchange.
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NASDAQ in Times Square, New York City
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Robert Shiller's plot of the S&P Composite Real Price Index, Earnings, Dividends, and Interest Rates, from Irrational Exuberance, 2d ed. In the preface to this edition, Shiller warns, "The stock market has not come down to historical levels: the price-earnings ratio as I define it in this book is still, at this writing [2005], in the mid-20s, far higher than the historical average... People still place too much confidence in the markets and have too strong a belief that paying attention to the gyrations in their investments will someday make them rich, and so they do not make conservative preparations for possible bad outcomes."
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this plot "confirms that long-term investors—investors who commit their money to an investment for ten full years—did do well when prices were low relative to earnings at the beginning of the ten years. Long-term investors would be well advised, individually, to lower their exposure to the stock market when it is high, as it has been recently, and get into the market when it is low."
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See also
In Spanish: Mercado de valores para niños
