The story begins around the time of 17th century when Dutch East India Company employed hundreds of ships to make the trade of various products like gold, porcelain, spices and silks around the globe. Trading of these things required a lot of money with good business plans. Things being not cheap, company came up with a wonderful idea. In order to have money for their expensive voyages, company started to target the private citizens. They targeted those group of people who could invest in their business.
In exchange, they agreed to share a certain part of the profit from their business with them. This practice allowed them to make large amount of profits not only for themselves but also for their investors. Selling their shares in various kind of places, Dutch East India Company unknowingly invented the world’s first Stock Market. With their first step towards the stock market, till now the company has been collecting the large amount of money in form of shares to support their different businesses.
Stock basically refers to the part of ownership of investors in one or several companies. Modern Stock Market is definitely more complicated than the prior one.
How do companies and investors use stock market nowadays?
When a company decides to launch in a market, then it first proposes its central or main idea in front of the big investors. If the investors like the company’s plan and ideas then they offer their sponsorship to it which is called Initial Public Offering (IPO).
Afterwards, company advertise itself in the official public market where any company or the individual who thinks the plan can be profitable starts to invest in the stocks of the company. Investing in the stocks make the investors partial owners in the business. With increment in the growth of the company, more investors see the potential of it and start to invest in the company.
With increase in the demands of the stocks, the price of them also increases which further raises the value of the stocks that people already own. This also increases the market value of the company. If the company seems to be less profitable in future then the demand of its stocks also decline leading to a loss for the investors if they not sell their stocks prior to when their value declines.
These situations occur due to unavoidable circumstances of market forces i.e. demand and supply. Demand and supply are totally dependent upon people’s preferences and contentment. Some other factors which also influence these situations are change in production technology, shifting costs of labor and fluctuating price of materials etc. It is highly unpredictable to get success in each and every investment due to the changing of circumstances. That’s why, various experts are building different tools to predict high chance of success in investment. With the help of internet, now in each and every part of the world, there are people from rich to poor who are ready to dive in the sea of investment. While earning income, it has become a duty to invest some money in stocks in order to pursue long-term financial goals.