A market is a meeting place
Financial markets connect people who need capital with people who can provide it. Companies issue securities to finance growth; investors buy those securities because they expect income, appreciation or both.
What you can own
A stock represents partial ownership in a company. A bond is a loan to a company or government. Funds combine many securities into one investment vehicle.
- Stocks: ownership and participation in business results
- Bonds: contractual interest and repayment
- ETFs and mutual funds: diversified baskets of securities
How prices move
Prices change when new information shifts what buyers are willing to pay or sellers are willing to accept. Earnings, interest rates, competition, policy and investor expectations can all change that balance.
The investor’s responsibility
A price is not the same as value. Your job is to decide what an asset may be worth, what could prove you wrong and whether the potential reward justifies the risk.