Benefits Of Stock Market

By Author: sudarshan singh
Total Articles: 327
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The stock market is important from both the industry’s point of view as well as the investor’s point of view.Stocks are issued by companies in order to raise capitals and are bought by investors in order to acquire a portion of the company. Even a small share of the company will give the investors the right to have a say in how the company is run.The stock market is the primary source for any company to raise funds for business expansions. If a company wants to raise some capital for the business it can issue shares of the company that is basically part ownership of the company. To issue shares for the investors to invest in the stocks a company needs to get listed to a stocks exchange and through the primary market of the stock exchange they can issue the shares and get the funds for business requirements. There are certain rules and regulations for getting listed at a stock exchange and they need to fulfill some criteria to issue stocks and go public. The stock market is primarily the place where these companies get listed to issue the shares and raise the fund. In case of an already listed public company, they issue more ...
... shares to the market for collecting more funds for business expansion.The shares from the companies listed on public exchanges can be bought and sold on the open market. Buying a partial ownership in smaller companies that are not listed on a stock exchange is also possible but that is a very different type of investment.

Stocks have a lot of advantages over savings investments because they represent ownerships in a particular company.Stocks, when compared with savings investments, both carry a higher risk of losing money and a higher potential of earning money. A good knowledge of the different stock markets and the various investment strategies can help investors to minimize their losses.The stock market is an open market where public investors buy and sell shares of publicly traded companies.Stocks also offer a great deal of liquidity because they can be sold at their fair market value and converted to cash at any time on the stock exchange. Stocks are very tax-efficient because capital gains from the sale of stocks can be offset by capital losses that bring down the amount of income subject to taxation.Stocks represent proportional shares of ownership in the company that you are interested in investing.Stock holders wants records, audits and paper trail of every transaction. They stay away from companies which deal in grey market for these companies tend to make the promoters richer at the cost of the investors. Hence stock markets makes a friendly environment to do business in.Gone are the days when the revenues and profits increased by a fixed predictable percentage every year. The best companies do not think about capturing 1-2% more of the market share but creating a whole new market. The only way to value these companies is the stock market for the companies are many times more than their book value.Developing nations need more capital to fund the new projects, set up plans and to grow and expand the operations. A well developed stock market like India encourages the promoters to tap the stock market for these much needed funds.The market and analysts often demand a higher standards of efficiency and management than what the Governments can even dream of asking via laws.The stock holders even force the companies to take CSR, and morals more seriously than what their B-Schools would have taught.

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