Stock Market Bubbles - An Amazing Screenplay

If the thought of investing in stock market scares you ,than you are not alone. Basically stock is the financial instrument that  represent the ownership in a company.It is one of the efficient way to raise your networth from squat to the pinnacle.Stock ownership implies that shareholder owns a slice of the company equal to the number of shares held as proportiom of the company's total outstanding shares.

Shares prices are set by way of auction, law of supply and demand etc. where the buyers and sellers place bid and offers to buy or sell

BID = price at which some one want to buy.

OFFER = price at which some one use to sell.

To convert an investors intention into an action thousands of transaction takes place in a minute due to which a huge gyrations get created. An average person have to trade through stock broker who acts as a middle man between buyer and seller for which he/she charge brokerage.

More over, if there are many buyers and sellers at sequentially higher and lower prices than market is said to have a good depth. It will give you approaximatly 8 to 9% return which is more than a bank return. Exactly earning estimates can't be generated due to gyrations and condition of market i.e bear and bull. It have been seen around for more than two centuries. Thus ,it is a device for transferring money from the impatient to the patient.

Financial market - A Massive place

It is a location where buyers and sellers meet to exchange good and services at price determined by forces of supply.

It facilitates the exchange of financial instruments and financial securites.

It includes:money market, capital market, derivates market, commodity market etc.

It aid to guide the efficient flow of savings and investment in the economy. generally the professional traders trade in an efficient market means where the transaction cost is minimum.

Lay man won't directly trade in this market but they can take aid of market mutual funds, brokers, dealers etc.

Its helps us to generate savings, wealth, liquidty, risk and credit.

Disadvantages:

it may not indicate a stock true intrinsic value because of some macroeconomics forces like taxes. And there are certain factors that change the prices of the securites suddenly.

Thus it's an massive market and a fast way to generate your wealth but at the same time it is risky.