Monday, March 19, 2012

How the Stock Market Works - 9 minute Animation / Cartoon explains the concept in simple words. Must Watch.

This old but funny video explains basics of how companies go public and sell stock to investors - this is a basic necessity of the capitalist system and making our lives better. Good companies use our initial capital to create goods that are in demand. We have to remember the basic purpose of the stock market and that income investments are the best for the well being of society and the financial system.

Buying and selling stocks feverishly is inefficient and ineffective to build a healthy economy. That could lead to too much focus being placed on the stock price and hence could lead to risky measures to increase the price. As well, the casino / gambling nature of stock trading does not lead to increased productivity. If only more stocks were bought to genuinely support companies and grow with companies in the long term, in a mutually beneficial relationship to companies and stock owners, rather than stocks being bought for the short term, only to make a quick buck!

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