Stock marketing consist of two terms which are "Stock" and "Market"
Stock also known as share or equity is a financial instrument that represents investor/holder's ownership in an organisation or company and also represents a proportionate claim on the company's assets, earnings and losses.
A share owner is known as shareholder and he or she owns a certain percentage of the company. For example ; Someone who owns 100 shares out of a company's 2000 outstanding shares have 5% ownership in the company.
Market can be seen as a place where goods and services are exchanged that is, bought and sold.
A Stock markets can be seen as a public market where individuals and investors come together to issue, buy, and sell shares on stocks exchange platform or over the counter.
Stock markets are regulated by a governmental agency as the exchange of stocks and other activities are very important for the economic development and growth of the country.
Stock marketing has numerous advantages and some of these advantages are :
Raising Capital : Stock marketing is a good way of raising capitals either for an existing company or new startups. A startup company can raise capital by issuing shares for sale to the public, which is known as equity financing.
Startups that issues shares are mostly companies with big project but little resources to fund the project so they offer certain amount of ownership to the public as shares so as to raise enough capital to fund the project. Well established companies also use stock to efficiently finance the corporation.
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They sometimes need larger amounts money than it can get from the company's profit or loan from bank, also to avoid financing project with borrowed money which may put the companies asset at risk. Any company that offers it shares through (IPO) is now a public limited company. For example UBA PLC, Dangote PlC etc.
To Generate return on investment : Investing in stock is a good way to make money. When an investors pick the right stock to invest in, they make profits on their stock market investments and there are two ways of making money;
An investors can do a short trading by using technical indicators to know when the price of the stock would be low so they can buy and resell when the stock price sprung up. Traders do this mostly on stock with high volatility. The second way is to buy stock of fast growing companies and hold on to it so as receive dividends as the company grows.
Part ownership Stake of the Company : Investing in the stock marketing is an easy way of owning a company. When an individual buys shares of a company, he or she automatically becomes co-owner of the business. Although the ownership percentage is determined by the number of shares the individual bought, the higher the number the higher the ownership percentage.
Also a shareholder may have right on deciosns of the organisation like voting rights and he or she is entitled to a certain percentage of the profit which is called dividend. For example, if a company issues out it shares at #10 each and there's 100 unit of outstanding shares, if an individual buys #500 shares which is 50 unit, he or she has 50% ownership of the business.
High liquidity : Shares or stocks have a high level of liquidity, allowing you to convert them to cash in a matter of seconds and at any time. Unlike other sorts of investments such as land, buildings, and other property investment, which can take days to convert into cash. You can also acquire shares easily online or through a broker.
Regulated : The government regulates the stock markets in each country. The relevant agency oversees the actions of enterprises that trade shares in order to promote fairness, the development of the country and the preservation of investors' rights. Nigeria's stock exchange, New York's stock exchange, and India's stock exchange board are just a few examples.
The improving economy benefits investors : The stock market is an important component of a healthy economy, and it reacts to a variety of economic indicators, including GDP, inflation, and earnings, among others. Investors in the stock market gain directly from a robust economy, and the profitability of their investments improves in perfect sync with gdp.
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Many of the same ideas can be applied to crypto as well.
Very well. But I was wondering the volatility of crypto compare to stock
Oh crypto is way more volatile! The moves in crypto over a day or two would take traditional stock years to match!