NYSE

What is the New York Stock Exchange?

A stock exchange is a place where brokers buy and sell stocks for their
customers. There are many stock exchanges throughout the world. The
largest one is the New York Stock Exchange, often called the NYSE. It began
exchanging stocks in 1792.

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How Trading Works

Trading on the NYSE is conducted primarily through member brokers and
specialists. An investor who wants to buy or sell shares of a NYSE-listed
company's stock contacts a broker who is a member of the NYSE. The broker
takes the information and contacts the NYSE floor broker. The floor broker
then transmits the order to the specialist for that stock. The specialist
facilitates all the buy and sell orders for that stock and makes sure they are
matched appropriately. The specialist then contacts the broker to
communicate that the trade has been made, and the details of the trade.

Primary and Secondary Markets

A company listed on the NYSE can attract capital for growing its business.
This is done through an Initial Public Offering, or IPO, which is the first time a
company's shares are sold to the public. Companies that want to have their
stock sold on the NYSE must meet certain listing requirements. These
requirements set minimums for a number of shares outstanding, stock price
and market capitalization.
The vast majority of trading on the NYSE is in the secondary market. An
investor looking to purchase shares of IBM, for example, is not actually
buying those shares from IBM. He is buying them from someone else who
already owns IBM shares and is looking to sell.

NYSE Performance
If someone says "The stock market went up today," she is referring to the
Dow Jones Industrial Average. The Dow is used by people around the world
as a benchmark of how the investing public is reacting to certain events. The
Dow Jones Industrial Average is an index of 30 well-known companies that
all trade on the New York Stock Exchange. The index is a composite of all
these companies' stock prices.

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Bull vs Bear
Investing in the stock market is risky, as sometimes stock values go up and at
times they go down. When values go up, which most investor want, it is called
a bull market. When values go down, it is called a bear market.

NYSE

History
Over the years, the economy has gone through numerous bull and bear
markets. The most famous bear market came to be known as the Great
Depression. What lead up to the Great Depression was the Roaring Twenties.
Basically, this was a bear market period after World War I when the country was
experiencing a huge growth period. Everyone became convinced they would
double or triple their money in the stock market. People bought on margin. This
way the investor needed to pay for only 10% of the stock and borrow the rest.
The craziness caused stock prices to go higher and higher. On October 29, prices
began to fall and brokers could not keep up with sell orders. Brokers called
investors and asked for payments of margin loans. "Stock prices virtually
collapsed yesterday," said The New York Times on October 30, 1929. Millions of
investors were ruined.
Safeguards were put in place after this event. Many of the problems were
blamed on poor trading practices and buying on margin. The Securities and
Exchange Commission (SEC) was created as a new federal agency to make sure
the rules were fair and followed. This does not mean that the market is no
longer a risky place. The NYSE is affected by the forces of supply and demand.
Investors carefully read financial papers to try to make informed decisions. They
also rely on the advice of stock brokers.
People watched the ups and downs of the stock market because nearly 50
million Americans own stock. They speculate on whether the market is bearish
or bullish and try to buy or sell to take advantage of these cycles. Much of it
happens at the New York Stock Exchange.