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What are The Stock Exchange and the market?

Updated on January 31, 2011

Hello hubbers,

With this I'm starting a series of articles that hopefully would be a guide of good investor. you can follow then as I will be updating the links to every part on all artciles, when a new article is released.

The stock exchange is an independent institution
serves as a link between business
and investors.
Those companies wishing to open their capital
public offering, approach to this institution and
after completing the requirements
required to open its capital to public
are generally able to deliver
part of its capital stock in exchange for
money will be used for different purposes
within the company, whether for new
ventures, financing, cancellation
debt, expansion, modernization, etc..
Let's take a simple example to
clarify the picture in a practical way.
Suppose you own a
company and invested $10,000 to create and
operating the same. Well,
now need money for a new project
by the sum of $3,000, but no longer
the capital.
Your next step to achieve that
amount would provide 30% of your business
for money. You could for example
go to offer through the supply system
issued, 3,000 shares of company value
$1 each.

So here we have a simple scenario:

you got the money to invest and
Investors took their shares in return
company they believe in their success. If we
view from behind the counter,
we see that the investor now instead of
money has shares.
Why someone would decide to change money
actions?. Simple. Who opted for this change
assessed the possibilities that exist with
regarding the company and concluded that
win market share against its competitors,
thus increase sales, generate
more gain and therefore the company could
end of the year worth $12,000.
According to this reasoning and
met investor perception, some
months after your money invested
in shares that cost $1, the
referred to the same investor would
stock price of $1.20 would
each, which left him a profit of 20%
because she saw the possibility of future
growth.
Every day in our market million
shares change hands and this is
a review that investors make
each company. While for some it is
time to opt out of certain
project, others are just beginning to be
profitable. This allows the free play of supply
and demand for shares and what

basically runs the market.
If a large number of investors see
that certain companies will have better
results in their next balances,
will surely be in high demand
actions and in turn short supply, which
oblige those who wish to purchase to pay
premium price for them. Conversely,
when a company shows signs of
demotion, surely holders
actions will decide it's time
made of money trying to sell, in this
case will be more supply than demand
which prices tend to fall.
This game is one that allows the movement
daily price and is based purely and
solely on supply and demand. Tan
simple as that.
If we clear what the situation and
sense to invest in a stock market
and if at this point, the issue sparked his
interest, we invite you to continue knowing
this exciting world from these
explanations.

What are the stocks?

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