WHAT GOES UP MUST COME DOWN– an introduction to the stock market
The Stock Market is a market where stocks, bonds, and other ‘securities’ are bought and sold. Very often these are brought and sold at a Stock Exchange. There are several different exchanges throughout the world, with the New York Stock Exchange probably the most well-known.
The value of stocks and bonds are fixed at the beginning of every trading day. Their selling price may rise and fall throughout the day, depending on two important factors. One is the performance of the company in particular. The other important factor is the health of the economy in general. People buy the stock if they think the price will rise or if it gives a good dividend – return on investment. They sell the stock if they think the price will fall or if it gives a low dividend.
But the stock market is not like a supermarket of stocks open to the general public. If you wish to participate in stock trading, then generally you must approach a broker. Because only a small amount of people are allowed in the exchange, most people who wish to trade securities must hire a broker to do the buying or selling for them. However since most individual brokers deal in very high volumes, they do not usually trade on behalf of small investors. So people usually contact a firm that is authorized to trade at the exchange. There are dozens of these brokerage houses, including household names like Morgan Stanley, Merrill Lynch and Charles Schwab. Brokers working at these firms buy and sell stocks on behalf of their clients, earning a commission from the transactions.
All brokers who buy and sell stocks at the exchange are working for companies that are allowed to trade there. A person wishing to buy or sell stocks contacts the broker and places an order to buy or sell a particular stock or bond. When the broker finds someone at the exchange who wants to sell or buy that same stock for the agreed price, then together they make a deal. Prices of stocks are posted all day long and the prices change during the day. The agreed upon price for any deal may be equal to the listed value or it may be another price the buyer and seller have agreed upon.
If you really don’t want a ‘middleman’ in your stock transactions there are other options. Online trading allows investors to access stocks all over the world, so you can buy and sell stocks without always the need for a broker. There are also some banks which allow you to set up your own stock portfolio and buy and sell stocks online using the funds in your bank accounts.
The size of the world stock market was reckoned to be $36.6 trillion US at the beginning of October 2008. In the words of comedian Mel Brooks: “That’s more than I make in a fortnight”.
stock market [stɒk ˈmɑːkɪt] – értékpiac, értéktőzsde
stock [stɒk] – értékpapír
bond [bɒnd] – kötvény
security [sɪˈkjʊərɪti] – állami kötvény
stock exchange [stɒk ɪkˈstʃeɪndʒ] – tőzsde
value [ˈvæljuː] – érték
trading day [ˈtreɪdɪŋ deɪ] – kereskedési/tőzsde nap
dividend [ˈdɪvɪdend] – osztalék
return on … [rɪˈtɜːn ɒn] – hasznon, visszatérülés, hozam
stock trading [stɒk ˈtreɪdɪŋ] – értékpapír kereskedelem
broker [ˈbrəʊkə] – bróker
investor [ɪnˈvestə] – befektető
brokerage house [ˈbrəʊkərɪdʒ haʊz] – brókercég
commission [kəˈmɪʃn̩] – jutalék
transaction [trænˈzækʃn̩] – tranzakció
to make a deal [tu meɪk ə diːl] – üzletet kötni
to be reckoned [tu bi ˈrekənd] – ki van számítva
fortnight [ˈfɔːtnaɪt] -két hét (14 nap)
by Scott Alexander Young
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