Understanding the Stock Market: A Beginner's Guide to Equities

The equity market, commonly referred to as the stock market, is where company stocks are bought and sold.  For investors, participating in the equity market represents an attractive opportunity to build wealth because historically, stocks have provided the greatest rates of return compared to other asset classes.

Trading stocks is a critical component of the economy and its ability to grow over time. It gives:

Investors the opportunity to own part of a company and reap the financial rewards associated with company growth

Investors voting privileges in certain company matters

Companies a means of raising capital for expansion, research and equipment

Since many factors influence the fluctuation of stock prices, investing through the equity market certainly has its ups and downs.  In addition to company specific conditions, the macroeconomic environment can lift or pressure stock prices. Home sales, unemployment levels, interest rate changes, risk of inflation and consumer confidence all contribute to the overall performance of the market. Although there is often tremendous opportunity for growth, there is also a great potential at times for losses. Careful consideration of your investments and time horizon can help keep your expectations in check.