The Stock Market and What it Does
Many kids our age don’t know very much about the stock market. Some may not even know what it is. It’s actually very important and relates to you more than you think. Keep reading to find out: what the stock market does, how it works, and how it could affect your everyday life.
The Stock Market is a way of trading shares. A “share” is a piece of ownership in a company and any person can purchase a share. Shares cost more or less depending on the company and their financial state at the point in time. For example, one company may be worth more than another. If a companies share price for 1 share is a lot of money, they could split their share to lower the cost per share by dividing it by 2. This helps companies sell more stock and make more money because they can sell to more people at a cheaper price per share (Investopedia).
Many kids might think “What does the stock market have to do with my everyday life?” Well, if the stock market fails, the whole country’s economy fails. If a company loses money, they’ll start charging more money for their products. Then, people won’t pay as much for those items and the company will fall. Many know about the 1929 stock market crash: millions of job losses and the economy took a nosedive. Thankfully, the country recovered, and so did the stock market (History Channel).
So far you may think that investing in the stock market is a bad idea, but it’s sort of like a lottery ticket. They both are about money and chance. You could gain money, but you could also lose money. When you buy stock, if the stock falls, your share will lose value, and therefore you will lose money. But if the company does well, your stock will rise in value, and you will gain money as a result (Investopedia).
The main thing about stock is you never know. Now as of January 2018 the stock of Bitcoin the global phenomenon currency is at about 1,600 dollars for one share. While about 2 and a half years ago in August 2015 it barely stayed at around 30 dollars per share (Google Finance). Stocks are all about risk, sometimes it pays off and sometimes it doesn’t. Clearly, for those who invested in Bitcoin, it paid off as of today’s market.
Many people even have jobs as stock traders. Their job is to buy stocks and sell them to make money. There are also many investment companies, and their purpose is to help you buy stock through their employees. If your shares make money, the company also gets some of your earnings as payment for their services.
Maybe now you’re interested in stocks and shares? The downside is you can’t buy stocks unless you are 18 or older, but with your parents, you can open your very own portfolio and buy stocks when you are under 18. As you can see the stock market is very important around the world, so maybe next time you have some extra money, open a portfolio and try it out!
References:
Hayes, Adam. “Stocks Basics: What Are Stocks?” Investopedia, 23 Jan. 2018, www.investopedia.com/university/stocks/stocks1.asp.
“Stock Market Crash of 1929.” History.com, A&E Television Networks, 2010, www.history.com/topics/1929-stock-market-crash.
The Globe and Mail – 21 hours ago, et al. “Google Finance: Stock Market Quotes, News, Currency Conversions & More.” Google Finance: Stock Market Quotes, News, Currency Conversions & More, finance.google.ca/.