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The stock market is one of the most powerful entities in the contemporary society and this is largely owed to the fact that it controls the financial aspect of the social order. Stocks and bonds are the most important concepts in the stock market, as companies and institutions buy and sell them depending on their interests. Most individuals who want to make a profitable investment think about the stock market as a starting point for their businesses. These people basically want to buy stock, hold it for a while, and then sell it for a higher price than they initially paid for it.
Each company has stocks of ownership and depending on the amount of stocks that an individual possesses; he or she is more or less entitled to control dealings in the respective firm. Companies sell stock with the purpose of improving their business, considering that the money that they make out of selling stock are invested in innovation processes meant to create newer and better products, in hiring more employees, or in modernizing their properties.
Similar to how companies sell stock with the intention of improving their businesses, the federal government sells bonds. The entity that sells bonds remains indebted to the individuals and groups who buy them, thus making it possible for these groups to be able to exercise a form of power over conditions in their country.
Individuals who buy stock become shareholders in the company that they buy them from and practically come to own a part of the respective institution. Companies that sell stocks to the general public are called public companies. If the company's profits experience an ascendant process, the shareholders also experience profits. Similarly, if the company's profits go down, the shareholders suffer as a result of the fact that stocks become cheaper. Luck is basically one...
Even with this, one would have to have a complex understanding of the firm that he or she is investing in before he or she actually decides to buy stocks from the respective company.
Most people are inclined to ignore the importance of the stock market and the effect that it has on society as a whole. Simply looking at how the stock market is partly responsible for the recent financial crisis is likely to open anyone's eyes regarding the power of stocks. The masses are typically likely to fail in having a proper understanding of the stock market because they are unwilling to acknowledge that it has a strong effect on them, regardless of the fact that they don't own stocks. A successful way of explaining how the stock market works would be to relate to simple trips to the mall. Individuals who buy merchandise from particular companies virtually assist those firms in earning money with the purpose of creating new products (The Stock Market).
In addition to being actively involved in the stock market as a consequence of the products they buy, the masses also interact with this environment as a result of being bombarded by the media world with news regarding stock markets. What most people know regarding the stock market is the fact that it presents potential investors with significant risks. The reason why people continue to invest in the entity in spite of the fact that they are acquainted with the risks associated with it "is that it offers many opportunities for people to make a lot of money. These opportunities are what have kept the stock market a vital engine for the economy and American business and industry for more than a century" (Furgang 5).
Investors generally hope that the companies that they buy stocks from are going to be successful in the future. Successful companies provide…
