Share Market Made Easy
For every beginner, Share market seems like a casino where people either get jackpot or get wretched. I am sure you too have heard many sticky stories where someone invests little amount in stock market and becomes very rich over night and some other guy just lost his all money in market crash.
If this is the case with you and if share market seems this much mysterious to you,then you are at right place. Here I will be demystifying all the these stories and mysteries. After this article you will have a clear idea about:
- What is a share?
- What is share market?
- How it works?
- How to start investing in shares?
- How to analyse market and be safe from losses?
So tighten up your belt, grab a cup of coffee and hold on.
What is a Share & Share Market?
From historical perspective, The concept share market was started some 300 years ago in present days Neitherland. The Dutch East India company was investing in discovering new sea routes and lands for business. But cost of each convoy was too high to bear by a single person. So the company started to ask investment from people. After finishing the convoy what ever business profit or loss the ship brings is divided in each person investing into it in ratio of their investment.
On those days ships convoys where very risky. Most of the ships never came back either they sink, looted or forget their route and so was the sponsor’s money. So people started to put their money in many ships instead of one and this makes the probability of loss lesser. Soon this idea went viral and people started to bid into ships and docks where the place to do this bidding. Our modern day share market is equivalent to that ship docks.
According to Wikipedia : A stock market, equity market or share market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (also called shares), which represent ownership claims on businesses;
Too much technical? Share market, Equity market and Stock market is all one and same. In layman’s terms share market is place where a company is assigned some values against its registration in market. Then the owner of the company divide this company valuation into desirable equal amounts. These equal divided valuation is called Share.
How share market works?
Suppose you are owner of some xyz company. You registered your company in share market and they calculated your companies valuation 100$. Now you can divide this valuation into 100 equal valuation ie — $1 and this is the price for 1 share of your company. If any one buys 10 shares for $10 then litterally he is 10% share holder of your company ie 10% owner of your company. Generally CEOs of the company holds majority of shares. The person who holds majority of shares of company becomes the decision maker of that company. For example Mark Zukerberg holds 60% of Facebook’s share and 40% are for public sale. SEBI The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India owned by the Government of India is the reglatory body of stock exchange of India. SEBI has made complecated, lengthy and sercure process of registring a company in share market to avoid scams.
This is the very basic understanding behind Share Market. In the upcoming post I will explain different terms related to stock market in a easy possible way. Till then Adios…..
