Sunday, 28 April 2013

The Stock Market

The Stock Market

The Stock Market in short is a place, were by companies that need extra money are matched up with investors, people who have excess money, excess money in this case meaning excess to everyday needs. Once these two are married up it enables them to share both the rewards and the dangers of the Market. 

Today the Stock Market in it’s various guise’s is a major part of the economy. It has also become a major part of the economics of Liberalism and the Stock Market is used as a way to gauge the health of the economy, at both a National and International level. 

But how wise is it to do so? 

The Stock Market preforms a valuable service to the economy, it allows excess money to be active instead of lying dormant under someone’s mattress. It also allows the investor to support ideas or companies that matter to the investor. But of course once money is invested in the Stock Market it is not available for other uses. For example it cannot be loaned to a local shopkeeper nor can it be used to set up a local business. My point here is to point out that one choice can cut off other equal choices. 

There is risk in investing, nothing is guaranteed, no matter how often you are told it is. This is why it is important that only excess money be used, money that in a worse case scenario can be lost in it’s totality and it will not destroy the investor financially. 

But it is a mistake to think that the economy and the Stock Market are the same thing. The Stock Market is part of the Financial or Money economy, something that is quite different and can be quite distinct from the real economy.

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