How does the stock market work?
Welcome! I'm so excited to help you demystify the stock market. It's a fascinating system, and once you get the hang of a few basic concepts, the headlines will start making a lot more sense.
To help me tailor our session, could you tell me a little about why you're interested in learning about the stock market, and if you have any previous experience or knowledge with investing?
I know a tiny bit, but I want to understand how it actually works under the hood.
Your path
Primary vs. Secondary Markets
How Investors Make Money
Understanding Market Indices
To understand how the stock market works under the hood, we have to start with the absolute building block of the entire system: the .
Imagine a local pizza shop worth $100,000. If the owner decides to split the business into 10,000 equal pieces, each piece is a share of stock worth exactly $10.
If you buy 1,000 of those shares, you now own 10% of the pizza shop. Because you are a part-owner, if the pizza shop does incredibly well, your shares become more valuable. If it fails, your shares might become worthless. That, in its simplest form, is what stock is.