What is the Stock Market?

Back to School Week: Guest host Amy Thompson-Cobb speaks to Morningstar's Emma Morgan about bull markets, bear markets and stock markets

Holly Black 7 September, 2020 | 2:51PM
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Holly Black: It's back to school week at Morningstar and to help cover all the investment basics we have brought back our team of young experts. Luckily, they are as good at technology as they are at grilling our analysts.

Amy Thompson-Cobb: Hello. I'm Amy Thompson-Cobb. And today, I'm going to be talking to Emma Morgan about the stock market. Hi, Emma.

Emma Morgan: Hi, Amy.

Thompson-Cobb: So, what is the stock market?

Morgan: Well, when you buy a piece of a company, you get a share or a stock in that company and the stock market is really just the place where you buy and sell those shares or stocks to other people. Historically, it was done in a physical location, but nowadays, it's generally over the computers or the internet.

Thompson-Cobb: Why are there lots of different stock markets?

Morgan: Well, that's a very good question. So, historically, it's been because companies generally want to raise money in the location that they are based. And there's a couple of reasons for that. So, customers around the area will tend to know those companies, so there will likely be higher demand. But also, companies will want to raise the money in their own currency, they will want to use their own language. Nowadays, there are stock markets that cover multiple locations, but you still generally have a stock market in most countries.

Thompson-Cobb: What do people mean when they talk about a bull market?

Morgan: Well, this is generally when the prices of those stocks are going up and everyone is really optimistic, people will say that that's a bull market.

Thompson-Cobb: And the bear market?

Morgan: So, the bear market is really the opposite of that. This is when prices of stocks and shares are falling and generally people are pretty pessimistic.

Thompson-Cobb: Thank you so much for your time, Emma. For Morningstar, I'm Amy Thompson-Cobb.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Holly Black  is Senior Editor, Morningstar.co.uk


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