Stock market research

The term ‘stock market’ is used to describe the totality of all stocks, especially within one country, that are traded by brokers and investors. However, it is distinct from a stock exchange, which is a ‘corporation’ that brings buyers and sellers of stocks together. For major stock exchanges in the United States include the NYSE and the NASDAQ. The biggest exchange in Europe is the LSE, or the London Stock Exchange.

In the begining, trading occurred on the floor of a stock exchange. Today however, most modern stock trading is done in electronic exchanges where buying and selling occurs through real-time online matching of orders placed by buyers and sellers. The big corporates can now trade in many countries and are not limited anymore.

Traditionally, buyers and sellers were individual investors. Over time, markets have become more institutionalized, that is buyers and sellers are largely institutions like pension funds, insurance companies, mutual funds, investor groups and banks. The rise of the institutional investor has brought in professional expertise which has also regulated the market. The ownership of stocks in markets also varies, for example the majority of shares in the Japanese market are held by financial companies and industrial corporations, whereas stock in the US or the UK are broadly owned, also by individual investors. In 12th century France, the ‘courratier de change’ were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. Because these men also traded with debts, they were referred to as the first brokers.

In the mid 13th century, Venetian bankers began to trade in government securities. In 1351, the Venetian government outlawed spreading rumors intended to lower prices of government funds. Bankers in Pisa, Verona, Genoa and Florence also began trading in government securities during the 14th century. The Dutch later started joint stock companies, which let shareholders invest in business ventures and get a share of their profits or losses. In 1602, the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds. The first stock exchange to trade continuously was Amsterdam's Beurs, in the early 17th century.

The Dutch pioneered short selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative instruments. There are now stock markets in most developed and developing economies, with the world's biggest markets being in the USA, Europe, Japan, India and the People's republic of China. The movements of the prices in a market or section of a market are captured in price indices called Stock Market Indices, of which there are many.