A market is any place where people gather—either in person or online—to buy, sell, or exchange goods and services. In the world of investing, there are different types of markets. The following sections will discuss some of the various types of markets that you may deal with.
Stock markets are markets where shares of publicly held companies are issued, bought, and sold through stock exchanges. There are two main types of stock markets, primary and secondary, they are as follows:
Bond markets are markets in which debt securities, primarily government, and corporate bonds, are issued, bought, and sold through electronic trading networks. As with stock markets, there are two types of bond markets:
A market is said to be a "bear market" when it is marked by a downturn in the price of securities within the market (usually a stock market) or an index. In other words, a bear market is one that is experiencing a widespread sell-off of shares with no expectation of a quick turn around. A 20% decline indicates a bear market has occurred.
Bear markets generally prompt fearful or pessimistic investors to hold onto cash or sell out when investments drop in value.
A "bull market" is a market that is characterized by an upward trend in the price of securities. This brings out the optimistic investors who hang onto or acquire investments with the hope that they will keep going up and up.
Bulls go UP: Bulls attack with their horns, tossing their prey or enemy up.
Bears go DOWN: Bears attack with a sweep of their paws down.
Stock exchanges are markets where securities, both stocks, and bonds, are traded. Bonds are often traded “over-the-counter” or off the exchange. Once a security is listed on an exchange, it can be traded. Most countries have their own stock exchange for trading shares of domestic companies. Stock exchanges vary in their total market capitalization (total value of all outstanding shares of listed companies), monthly trade volume, and listing requirements.
Can you correctly list the 2015 top 10 global stock exchanges by size (market capitalization)?Begin Quiz