What Are The Pros And Cons Of The Stock Market?
Understanding the nature of the stock market, including its pros
and cons, doesn't have to be confusing one. Many people fear
that in order for them to know the nature of the stock market,
they have to understand a gamut of stock and marketing terms and
all that jazz.
On the other hand, some people saw behind the veneer of all
these economic gibberish, and saw the potentials of what they
could get from investing in the stock market.
In a nutshell
Simply put, the stock market is the market to buy and sell
stocks and shares. This is where company stock gets traded. The
term is also used to describe the totality of all stocks in one
country. That is why we hear reporters talking that "the stock
market was up today" or that "the stock market went down after
the dollar fell to the euro."
What are the pros and cons of the stock market?
One of the reasons why we need the stock market is because it is
an important factor for the US economic system to operate.
Through the stock market, US companies improve their financial
viability and expand their operations by raising funds from
selling stocks. Without the stock market, our companies become
slower in their growth and might falter in the increasing
competition in the US as well as against international companies.
Another reason for the existence of the stock market is that it
also has role in personal financial planning. This is because
many individuals buy stock shares as part of their personal
financial strategies. More importantly, most Americans have a
stake in the stock market because retirement programs invest in
stocks. It has shown that retirement programs earn a lot more by
investing in common stocks than other options such as saving the
funds in banks.
Of course, the stock market also has its downsides. Remember
that the stock market is not a tool for instant success. True,
there are cases of one getting wealthy by investing in the
market, but this involves having shares in various company
stocks, which means a lot of research, time, and money. One also
gets rich when some stocks become "hotter" such as the "dot-com"
bubble in the nineties, but when the initial buzz around these
stocks falter, the value of these stocks tend to crash.