Share market, How does it work? how you can invest money in it? advantage and disadvantage of share market(1)

Let’s know about share market

Hello friends, let’s talk about share Market, what is share Market? Why is it in place? How does it work? What are its advantages and disadvantage? And how you can invest money in it.

What is share market?

Stock market, share market or stock market are the same, they are markets where you can buy or sell shares of a company. Buying a share of a company means buying some percentage of the ownership of that company, and you become the owner of the percentage of that company. If this comment mentions a profit, some percentage of that will also be given to you, if this company incurs a loss, a percentage of that loss will also be borne by you. Let me give you an example of this in the smallest scale, suppose you have to start a startup, you have 10000 rupees but it is not enough. So you go to your friend and tell him to invest another Rs 10,000 and offer him a 50-50 partnership. So whatever your company profits in the future, 50% of it will be yours. 50% of it will belong to your friend, in which case you have given 50% of the shares to your friend in this company. The same thing happens in the stock market on a larger scale, except that instead of going to your friend, you go around the world and invite them to buy shares in your company.

History and purpose of shares(share market)

The origin of the stock markets dates back to about 400 years ago, around the 1600s, there was the Dutch East India Company, as was the British East India Company. A similar company existed in the Netherlands today, known as the Dutch East India Company. In those days, people often explored ships, maybe the whole world was not yet discovered. Therefore, companies sent their ships to discover new lands and trade with distant places, the journey on board the ship was more than thousands of kilometers, for this a huge amount of money was required. At that time, not a single person owned such money individually. So they publicly invited people to invest money in their ships, and when those ships traveled long distances to go to other countries and return with treasures from there, they were eventually promised a share of those treasures/money, but it was a very risky business , because in those days more than half the ships filled to return were lost, or broken, or plundered. Anything could happen to them. Thus, investors realized the risky nature of this enterprise. So instead of investing in one ship, they preferred to invest in 5-6 of them so that at least one of them would change to come back. So it created a kind of stock market.

What is stock exchange

A stock exchange is a place, a building, where people buy and sell shares of companies. The market can be divided into two types – primary market and secondary market. Primary markets are where companies sell their shares, companies decide exactly what their share prices will be, although there are some rules to this, companies can’t maneuver too much because a lot of it depends on demand. People who bought shares of a company can sell them to other people, this is called the secondary market.

How many shares can a company have?

It should be noted that each share of the company has the same value, the company itself decides how many of its shares it wants to issue. If the total value of the company is 1 lakh then it can be 1 lakh shares of Rs 1 each or 2 lakh shares of 50 paise each. When companies sell their shares on the stock market, they never sell 100% of them, the owner always keeps the majority of the shares to retain decision-making power. If all the shares are sold, all the buyers of the shares will become owners of the company. Since they all become owners, they all can make decisions about that company, but a person who owns more than 50% of the shares will be able to make decisions about the company. So the founders of the company prefer to keep more than 50% of the shares, for example 60% of the Facebook shares are held by Mark Zuckerberg, people who bought shares of the company can sell them to other people, this is called the secondary market, where people buy and sell shares among themselves and trade shares. In the primary market, companies determine the price of their shares, in the secondary market, companies cannot control the price of their shares. Stock prices fluctuate based on supply and demand, so stock prices fluctuate based on supply and demand.