In the 1600s, the Dutch East India Company employed hundreds of ships to trade gold, porcelain, spices, and silks around the globe. But running this massive operation wasn’t cheap. In order to fund their expensive voyages, the company turned to private citizens – individuals who could invest money to support the trip, in exchange for a share of the ship’s profits.
This practice allowed the company to afford even grander voyages, increasing profits for both themselves and their savvy investors. Selling these shares in coffee houses and shipping ports across the continent, the Dutch East India Company unknowingly invented the world’s first stock market.
Since then, companies have been collecting funds from willing investors to support all kinds of businesses. And today, the stock market has schools, careers, and even whole television channels dedicated to understanding it. But the modern stock market is significantly more complicated than its original incarnation. So how do companies and investors use the market today?
Let’s imagine a new coffee company that decides to launch on the market.
First, the company will advertise itself to big investors. If they think the company is a good idea, they get the first crack at investing, and then sponsor the company’s initial public offering, or IPO.
This launches the company onto the official public market, where any company or individual who believes the business could be profitable might buy a stock.
Buying stocks makes those investors partial owners in the business. Their investment helps the company to grow, and as it becomes more successful, more buyers may see potential and start buying stocks.
As demand for those stocks increases, so does their price, increasing the cost for prospective buyers, and raising the value of the company’s stocks people already own. For the company, this increased interest helps fund new initiatives, and also boosts its overall market value by showing how many people are willing to invest in their idea.
However, if for some reason a company starts to seem less profitable, the reverse can also happen. If investors think their stock value is going to decline, they’ll sell their stocks with the hopes of making a profit, before the company loses more value.
As stocks are sold and demand for the stock goes down, the stock price falls, and with it, the company’s market value. This can leave investors with big losses – unless the company starts to look profitable again.
This see-saw of supply and demand is influenced by many factors. Companies are under the unavoidable influence of market forces – such as the fluctuating price of materials, changes in production technology, and the shifting costs of labor.
Investors may be worried about changes in leadership, bad publicity, or larger factors like new laws and trade policies. And of course, plenty of investors are simply ready to sell valuable stocks and pursue personal interests.
All these variables cause day-to-day noise in the market, which can make companies appear more or less successful. And in the stock market, appearing to lose value often leads to losing investors, and in turn, losing actual value.
Human confidence in the market has the power to trigger everything from economic booms to financial crises. And this difficult-to-track variable is why most professionals promote reliable long term investing over trying to make quick cash.
However, experts are constantly building tools in efforts to increase their chances of success in this highly unpredictable system.
But the stock market is not just for the rich and powerful. With the dawn of the Internet, everyday investors can buy stocks in many of the exact same ways a large investor would.
And as more people educate themselves about this complex system they too can trade stocks, support the businesses they believe in, and pursue their financial goals.
The first step is getting invested.
Source: TED-Ed WORD BANK: porcelain /ˈpɔː.səl.ɪn/ (n): đồ gốm sứ spices /spaɪs/ [B1] (n): gia vị voyage /ˈvɔɪ.ɪdʒ/ [B2] (n): chuyến đi trên biển share /ʃeər/ [B2] (n): phần, cổ phần grand /ɡrænd/ (adj): lớn, quan trọng savvy /ˈsæv.i/ (adj – informal): thông thái willing /ˈwɪl.ɪŋ/ [B1] (adj): sẵn lòng dedicated to sth /ˈded.ɪ.keɪ.tɪd/ [C1] (adj): dành riêng cho cái gì incarnation /ˌɪn.kɑːˈneɪ.ʃən/ (n): hiện thân get/have crack at sth (idiom): nỗ lực, thử làm gì initial public offering (IPO) /ɪˌnɪʃ.əl ˌpʌb.lɪk ˈɒf.ər.ɪŋ/ (business terms): chào bán công khai lần đầu profitable /ˈprɒf.ɪ.tə.bəl/ [B2] (adj): có khả năng sinh lời partial /ˈpɑː.ʃəl/ [B2] (adj): một phần prospective /prəˈspek.tɪv/ [C1] (adj): tiềm năng initiative /ɪˈnɪʃ.ə.tɪv/ [C1] (n): sáng kiến boost /buːst/ [B2] (v): thúc đẩy reverse /rɪˈvɜːs/ [C1] (n): điều ngược lại see-saw /ˈsiː.sɔː/ (n): trò bập bênh shift /ʃɪft/ [C1] (v): thay đổi publicity /pʌbˈlɪs.ə.ti/ [B2] (n): quảng cáo variable /ˈveə.ri.ə.bəl/ [C1] (n): biến, giá trị biến thiên trigger /ˈtrɪɡ.ər/ [C1] (v): gây ra economic boom /iː.kəˈnɒm.ɪk buːm/ (n): sự bùng nổ kinh tế crisis /ˈkraɪ.sɪs/ [B2] (n): cuộc khủng hoảng promote /prəˈməʊt/ [B2] (v): khuyến khích, thúc đẩy constantly /ˈkɒn.stənt.li/ [B2] (adv): không ngừng, liên tục the dawn of sth /dɔːn/ (expression): khởi đầu của cái gì pursue /pəˈsjuː/ (v): theo đuổi ỦNG HỘ READ TO LEAD! Chào bạn! Có thể bạn chưa biết, Read to Lead là một trang giáo dục phi lợi nhuận với mục đích góp phần phát triển cộng đồng người học tiếng Anh tại Việt Nam. Chúng tôi không yêu cầu người đọc phải trả bất kỳ chi phí nào để sử dụng các sản phẩm của mình để mọi người đều có cơ hội học tập tốt hơn. Tuy nhiên, nếu bạn có thể, chúng tôi mong nhận được sự hỗ trợ tài chính từ bạn để duy trì hoạt động của trang và phát triển các sản phẩm mới. Bạn có thể ủng hộ chúng tôi qua 1 trong 2 cách dưới đây. Lớp luyện thi IELTS online Bạn đang có nhu cầu thi chứng chỉ IELTS cho đầu vào đại học, đi du học, xin việc hay xin cư trú và đang phân vân chưa biết học ở đâu? Nếu bạn đang tìm kiếm dịch vụ luyện thi IELTS online với giáo viên uy tín và chất lượng, cũng như học phí phải chăng, thì thầy Trung (Admin và dịch giả chính của Read to Lead) có thể là một lựa chọn phù hợp dành cho bạn. Hãy liên hệ (nhắn tin) tới trang Facebook cá nhân của mình (https://www.facebook.com/nguyen.trung.509) để tìm hiểu về lớp học và được tư vấn cũng như được học thử nha!
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