Equity Market

Equity Market
By
www.CandlestickForums.com

Equity market is another name for a
stock market.

The term equity also refers to the value
of someone’s ownership of a
business, property, or a shareholder’s
partial ownership in a business.

An equity is a stock or stock share not
bearing fixed interest.

In other words an equity’s value rises
and falls with that of a company and its
shares. It does not pay guaranteed
interest as with a bond.

Use of the term equity market reminds
us that a stock market investment is
owning shares of a company’s assets.

An equity market is a public market
where stocks are listed, bought, and
sold.

An equity market, or stock market, has
members who do the buying and selling.

Everyone else pays a commission for this
service in order to buy stock or sell
stock.

Now, in the computer age, exchanges
such as the NASDAQ are virtual and all
activity is in a computer system.

This contrasts with the traditional
“outcry” system of the New York Stock
Exchange (NYSE) where orders flow
through a real person, a floor broker.

Equity markets allow companies to raise
money without borrowing.

Rather than incurring debt the company
sells ownership shares, giving away
future profits and giving a vote in the
affairs of the company for each share.

Although a public stock company may
not incur debt by issuing stock, it always
runs the risk of a takeover.

An outside party can purchase a
sufficient number of stock shares to
control the company’s board of
directors, name its own management
and take over the company.

Besides allowing a company to raise
money, equity exchanges offer very
liquid investments.

Stocks are almost always easier to buy
and sell and a clear market value than
real estate, for example.

There are equity exchanges throughout
the world.

The New York Stock Exchange and
NASDAQ are the two large American
exchanges.

Canada has the Toronto Stock Exchange.
European exchanges include the London
Stock Exchange, the Paris Bourse, and
the Deutsche Börse.

Asia has the Hong Kong Stock
Exchange, the Tokyo Stock Exchange, the
Bombay Stock Exchange, and the
Shanghai Stock Exchange.

In Latin America there are the
BM&FBovespa in Sao Paolo, Brazil and
BMV, the Bolsa Mexicana de Valores.

In the United States market indexes such
as the S&P 500 help traders and
investors follow the market sectors.

A problem with dealing in many equity
markets outside of the United States is
the lack of transparency.

The United States Securities and
Exchange Commission (SEC) oversees
American stock markets, helping to

insure that illegal insider trading, for
example, does not enrich some at the
expense of others.

Although the SEC does not do a perfect
job it provides an oversight that is sadly
missing in many markets outside of the
United States.

Even basic stock information may be
lacking on some foreign exchanges.

Unless the investor has excellent inside
information in some foreign
exchanges, the best stock market
investing strategy may well be to trade
and invest at home.

Trading in the equity market requires
learning the basics of stock market
investing.

As stock prices move up and down
traders and investors buy stock and sell
stock in search of a profit.

A day trader will buy and sell within a
day, typically holding no stock positions
overnight.

Long term investing engages in
techniques like value stock investing in
order to capture a stock at a low price
and allow it to appreciate in value over
many years.

Equity Market

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