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Stocks are the vehicle people use to invest in companies. To invest in a company you must buy the company's stock using a broker. Today, most people purchase stock via the internet using an online broker as it tends to be more efficient and affordable. By purchasing shares of stock you essentially take part ownership of the company, although it may be a very miniscule ownership of the company you still have a piece of the pie and do have a say at shareholder meetings.
Shares of a company trade on the stock market in which the company is listed. The three major stock markets in the United States are The New York Stock Exchange (NYSE), The American Stock Exchange (AMEX), and The NASDAQ meaning National Association of Securities Dealers Automated Quotation. All three major US markets list stocks that trade for less than five dollars per share. Any stock under five dollars per share is classified a penny stock, therefore penny stocks exist on all three major US stock markets, and stock markets throughout the world.
The inauguration of the New York Stock Exchange (NYSE) Organization commenced on May 17, 1792. Faced with cut rate competition from a group of powerful government bond merchants, twenty-four brokers signed the Buttonwood Tree Agreement. The Buttonwood Tree Agreement was named after the huge Sycamore (known as a Buttonwood Tree) in front of 68 Wall Street under which brokers gathered to trade. The first listed company was the bank of New York, and began trading under the Buttonwood Tree in the year 1792. Today, the NYSE is the largest stock market in the world. On an average day, over 1.8 billion shares valued at more than $69 billion trade on the NYSE, where the total global market capitalization for it's listed companies is $22.5 trillion. On March 8th, 2006 the New York Stock Exchange ended a 213-year history as a member owned club as the NYSE began life as a public traded company. Becoming a for-profit business, the NYSE now has share holders and will undergo the same scrutiny that all public traded companies experience.
The American Stock Exchange (AMEX) is believed to have commenced around 1849. Government securities traded on the curb of Broad Street in New York. The brokers at this time had to create hand signals as the noise from so many trades increased. In 1921, the exchange moved indoors to it's current location on Trinity Place, and in 1953 was given the name of the American Stock Exchange. The AMEX merged with NASDAQ in 1998 to create the NASDAQ-AMEX Market Group. The exchanges continue to operate separately, however it was a wise move by both exchanges to try and keep up with the leader of the pack, the NYSE. The American Stock Exchange handles ten percent of all American trades making it the third largest stock exchange in the US behind the NYSE and the NASDAQ.
The NASDAQ was the worlds first electronic stock market. The purpose of it's founding was to popularize the OTC (over-the-counter) securities market which, up to that point, had been relatively unknown and unused by many investors. With it's inception on Februrary 8, 1971 the NASDAQ system displayed only NASDAQ listed stocks, separating itself from other OTC stocks. Five years later the NASDAQ began displaying inside quotations, which showed the markets best bid and best sell prices on screen. Today, the NASDAQ has a bid and sell quotation system known as the "level two" quotation system which gives incredibly in depth supply/demand information for NASDAQ listed stocks. You can literally place a buy or sell "limit order" and watch it appear on the level two screen instantaneously.
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Section II - Buying and Selling Stock
Sections III & IV - Fundamental and Technical Analysis
Section V - Diversification
Section VI - Federal Reserve Bank
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