What is the stock market and the stock exchange, what benefits society bring stock exchanges and what is the meaning of stock trading. How to make money on the Moscow stock exchange, who are speculators and investors. These and many other questions will be discussed in this "training" article.
So, why do we need an exchange? In simple terms, the exchange is a platform that unites people who have money with people who need this money. Let's say there is a person who needs money to develop his business. What could he do?
- Get a Bank loan. But banks lend to businesses at high interest rates. Therefore, it is an expensive option.
- He can issue bonds and pay interest on them. But it is also quite expensive.
- He can issue shares and sell them to anyone. This is the cheapest way to raise capital.
By selling shares, a company sells a stake in its business in return for money. At the same time, people who buy shares receive a share in the company, as well as, in most cases, profits from owning them (dividends).
For example, take Severstal shares. A few years ago (in April 2015) one share of the company was worth 570 RUB For 4 years and at the present time of the action brought 460 RUB dividends. In 2014, the share price was even lower (about 248 rubles). As a result, since 2014 the company has paid dividends for a larger amount than the purchase price. Thus, the shares became free. Thus, the investment is fully paid off, plus the shares rose in price by 2 times.
Given that we paid about 100 rubles a year, the yield is 20% per annum. This is despite the fact that Deposit rates are falling. Currently, they are about 6-6.5% per annum, but may soon fall even lower, as the Ministry of Finance forecasts inflation at 3%. Therefore, a yield of 20% is a very good yield.
This is a good example of how profitable investments are for investors. At the same time, the sale of shares is beneficial for the company itself, because it attracted funds that it invested in production, increasing it, which, in turn, led to an increase in profits. Thus, investments are beneficial for both parties, the company's management attracted cheap money, increasing its profits, investors received high returns for their investments.
This example shows that on the stock exchange everyone gets what they want, and also see where the money comes from on the stock exchange: there are investors who invest their funds, there are companies that attract these funds and generate profits, which are then shared with shareholders. Dividends may also be returned to the stock exchange in the future.
Of course, not all investments are profitable, not all decisions on the exchange are correct, not everyone "fits" the exchange. But this is the topic of a separate article.
Exchange-redistribution of money. In particular, from people who made the wrong decision to reasonable investors.
In addition, the exchange helps to redistribute money to sectors of the economy. For example, a breakthrough is expected in one sector and stagnation in the other. For example, the telecommunications sector. In this sector, there are already certain operators, their database has been expanded to the limit, there is no special development in this sector. Shares of these companies are also not particularly growing. Investors from this industry are flowing to others. For example, in Hi-tech. For example, if you look at the US market, these are shares of Apple, Amazon, Microsoft. The growth dynamics of these shares is impressive. This is due to the fact that the industry, which is in stagnation, does not need much money, the companies of this industry simply function, maintaining themselves at the same level. But the developing industry needs money. Thus, the exchange redistributes funds from one industry to another.
Redistribution occurs in several ways.
- Planned approach, i.e. the state decides where to invest. But this approach is not always correct. For example, recall the USSR, the government considered Cybernetics a pseudoscience and did not direct funds to it. In the end, as we know, this decision was wrong.
- Exchange approach. On the stock exchange there are investors who analyze the situation and direct their funds where they see fit. This approach is more optimal. That is why the existence of an exchange in a capitalist state is necessary.
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