Stock Market Composition

You have probably heard about the “Market” or “Stock Market”, It is called that because it is  the “Place” or the “Market” where shares of stocks of  publicly traded companies are bought and sold.

Traditionally the Stock Market was a central meeting place where buyers and sellers met to buy and sell stock. Back in the early days of the Stock Market, buyers and sellers would meet on the exchange floor to conduct their transactions, much in the same way you would go to a Farmer’s Market to buy and sell goods.

The stock market is made up of different Exchanges where people meet to buy and sell stock. There are many exchanges, but for the purpose of this course, we will only consider the five major exchanges, thousands of publicly traded companies are bought and sold every day on these exchanges. The following are the 5 major exchanges:

New York Stock Exchange (NYSE)

Nasdaq Stock exchange (NASDAQ)

American Stock Exchange (NYSE MKT), formerly known as AMEX

Over The Counter Bulletin Board (OTC.BB)

OTC Markets (OTC), formerly known as the Pink Sheets

Over the years as more people have become involved in trading stocks, the exchange floors could no longer accommodate all the buyers and sellers of stock.  It was necessary to develop a more efficient way to buy and sell stocks; as a result Brokerage Institutions were created. The brokerage house or firm has a representative (broker) on the exchange that trades stocks on behalf of their clients.

Over the years as more people have become involved in trading stocks, the exchange floors could no longer accommodate all the buyers and sellers of stock. It was necessary to develop a more efficient way to buy and sell stocks; as a result Brokerage Institutions were created. The brokerage house or firm has a representative (broker) on the exchange that trades stocks on behalf of their clients.

Companies that trade in the Stock market are divided into sectors. Sectors are broad divisions of these companies that make up the market. Examples of sectors are Technology, Healthcare, Financial, etc. These sectors are then further divided into industries.

An industry will fit within the sector; industries are more specific than the sectors in which they belong. For example, the Technology sector is divided into electronics, Internet, Telecommunications, Computer Hardware, Computer Software industries. These industries are further broken down into groups and subgroups.