So lets sort it out.
The terms stock market and stock exchange are sometimes used interchangeably.
In the U.S., there are two major stock exchanges, or locations that stocks are traded.
A company will usually list its shares for trading on one of the exchanges, but not both.
Companies that are traded on a stock market are usually established enough to be serious players in their industry.
If a company is doing well and its stock is popular, the price goes up.
These fluctuations impact how much your share of that company that you already bought is worth in your portfolio.
If the stock price is down when you sell, theres a chance youll lose money.
Who are the people on the trading floor?
Honestly, a lot of it is for show.
Stuff happening on a computer is a lot less exciting than watchingthis guyorthis guyreact to market fluctuations.
(But seriously, everyones favorite isthis guy.)
I saw a headline about the stock market being up/down.
Whats up with that?
Two of the biggest ones are the Dow Jones Industrial Average and the Standard & Poors 500.
Should you sell your shares and get the heck out of there?
Youve got to hold on.
Your losses only become real if you actually sell your shares.
What about bonds and other types of investments?
you could buy a share of just about anything: debt, currency, gold.
But bonds are a big one for everyday investors.
When you buy a bond, youre buying a companys or a governments debt.
You also do this in the form of shares.
Bonds are typically considered less risky than stocks because theres less fluctuation in value.
But not everything gets traded on the floor of whatever stock exchange.
Bonds dont have a central trading spot like stocks do, although youll hear discussion about the bond market.
But what do Ireallyneed to know about the stock market?
Not interested in day-to-day investing news?
If one companys stock goes down, it means theres probably an issue with that specific companys performance.
If the markets are up?
Then investors are feeling optimistic.
Tracking the daily fluctuations isnt necessary if youre building a nest egg in abalanced portfoliodesigned for long-term growth.
