The stock market is a place where investors and traders buy and sell fractional ownership of publicly-traded companies. It is a vital part of our modern economy, providing the capital necessary for technological advances like smartphones and medications to be developed. Investors buy stocks for a variety of reasons. Some may hold shares for dividend payments; others look for low-priced stocks that are likely to gain value, with the intention of selling them at a profit. Still others may buy and sell to have a say in how specific companies are run. Whether you buy and sell stocks on your own or invest in mutual funds and exchange-traded funds (ETFs) that hold diversified mixes of hundreds of individual stocks for you, the markets are regulated to protect against fraud and unfair trading practices.
The price of a stock rises or falls based on the laws of supply and demand. If lots of people want to buy a stock, the demand pushes the price up, which entices current shareholders to sell at a higher profit. On the other hand, if a company experiences poor profits or a slowdown in the global economy, stock prices might fall as investors decide to sell their shares for less than they paid for them.
Many different factors can influence the price of a share, including news about the company or its industry; the performance of other companies in the market; and technical analysis of historical data. Most of the buying and selling happens through intermediaries on a physical or virtual (electronic) stock exchange, though a growing amount of trading takes place online.