February 6th, 2008 | 
Author: The investment in stock exchange must be made carefully because the risks involved are very high. An individual stands to lose money that he has invested in shares listed on the stock exchange. The loss may result on account of factors beyond the control of the investor.
Some of the factors that affect stock exchange movements are state of the economy, terrorist attacks or threat of war, unexpected rise or fall in the price of oil, collapse of governments etc. Stock exchange movements are also affected by investments made by large investors especially mutual funds, financial institutions or large corporations.
These organizations are known to pull out their investments from one stock exchange, and invest them in another stock exchange. When this happens the stock exchange from where the funds have been pulled out suffers a sensational collapse. This is especially true of third world stock exchanges like that of India, where bull and bear runs are very often caused by the erratic behavior of international financial investors.
The best time to buy stocks is when a company lists its shares on the stock exchange. This is known as IPO or initial public offering. The value of the stocks at this time is low. Sometimes the stocks are offered at par, that is without premium. Therefore, the chances of making money are higher.
However, every investor must remember that a stock exchange is only a platform where stocks are traded. The stock exchange does not own shares. The shares are owned by the company that has offered them, or investors who have bought the shares. The role of the stock exchange is limited to that of a facilitator, that is it creates an environment where stocks can be traded freely.
Earlier, the stock exchanges provided for physical trade in stocks. The investors had to maintain stock certificates issued by companies and authenticated by the stock exchanges. Today, most stock exchanges allow online trading. This has made it possible to trade in stock exchanges from all over the world, in real time.
Related posts:
Posted in 
Tags: