Jamaica Stock Exchange Basics: What is the stock market and how does it work?

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Introduction to the Stock Market

Stock Market is a very popular term among people around the world because of the commodity it deals in- money! In simple terms, the stock exchange is a place where investors can go to purchase stocks of a public firm. The value of the stocks will keep varying – it can go sky-high or it can hit rock-bottom, depending on the integrity of the brand or the company.

Jamaica Stock Exchange Basics: What is the stock market and how does it work?

Investors and those looking to buy stocks of a particular company or organisation will normally analyse the company’s existence through the years and its successful business history. Any firm such as Amazon, Google or even local banks have stocks that people can buy. The pricing will, however, change regularly and one may witness considerable growth or a steep fall through the years.

The Jamaica Stock Exchange (JSE) is one of the hundreds of stock exchanges in the world. The JSE deals with brands and companies that operate across the island. It may also include firms that have direct or indirect ties to the country even though business operations are carried out elsewhere.

What is the Stock Market?

The official definition for the stock market is that it is a place where people can sell, buy or exchange stocks. While it is commonly known as ‘stocks’, investors call it ‘equities’. Equities or shares allow the investors to quickly raise funds from the public for considerable growth.

Each nation of the world relies heavily on the stock market and the value of shares of different companies to improve the overall growth of the nation. The public, which includes investors and other interested parties buy shares from the share market. Several such purchases of shares grow into big numbers allowing the companies to expand or diversify in different areas.

The investors and brokers also make an income every time there is an increase in the price of stocks. When a broker sells stocks, he/she makes a small broker fee, while the seller gains the increased amount as profit for the investment they made.

How Does it Work?

A typical stock market or stock exchange relies on multiple parties for efficient operation. Financial Advisors who are involved in it as full-time employees get 1% as their fee. A similar percentage is taken by online traders who allow investors and the public to make investments from the comfort of their home through a website or app.

Jamaica Stock Exchange Basics: What is the stock market and how does it work?

The overall stock exchange market in the world is governed by Wall Street in the United States. Such power exists because the majority of the world trade is done using American Dollars. Major banks like Goldman Sachs and Wells Fargo have a say in the financial planning to ensure that the market is handled smoothly. The largest stock exchange in the world is the New York Stock Exchange located in The Wall Street which handles about $21 trillion in stock value, while there are many others spread around the world including Jamaica.

The History of Jamaica Stock Exchange

The Jamaica Stock Exchange was officially incorporated in the year 1968. It is located in the capital city of Kingston. The stock exchange follows its own terms allowing the country to take control of the economy, to ensure the inflation rate is kept low and also as a way for the public to make small investments with benefits in the long run.

Jamaica Stock Exchange Basics: What is the stock market and how does it work?

While it did not have a significant impact in the past, the exchange has grown immensely in the last few years and is now one of the potent markets. Investors from around the world have started noticing how stable the stock market is in Jamaica when compared to the dips and dives in the international market that makes it difficult even for expert investors to take decisions and make a profit.

Understanding and Investing in Companies Through the Jamaican Stock Exchange

For starters, one could consider playing the Jamstockex game, a game designed to help people understand how to buy stocks, sell them and choose the right company to invest their money in.

There are two types of stocks – the first one is ordinary stocks where you get paid when the company makes profits and stock prices rise. The other one is preferential stocks which provide a fixed interest rate for the investors irrespective of whether the business is making a profit or not.

Buying and Selling Shares

  • Get in touch with a stockbroker who can help you buy shares.
  • The broker should hold an authorized license and work in one of the recognized brokerage firms that are allowed to take part in the Jamaican stock trading.
  • The broker can help purchase shares in a company of one’s choice and all instructions can be provided either in person or over the telephone.
  • They can also help to sell the shares when the market is volatile.

Do’s and Don’ts of Being a Shareholder/Stock Investor

While there is a common assumption that only big companies invest and reap benefits from a stock market, the Jamaica Stock Exchange is a far easier place to work in. The resources and business hours are limited; you can invest small amounts initially to understand the real challenges before investing heavily into the company’s shares.

Read through the financial news and magazines released by the organisation. Jamstockex is stable and growing at a rapid pace. You can also check out the game which is similar to the game of Monopoly. It teaches you the basics of investing, about the stock exchange, how it works, buying and selling, besides making timely decisions. Always keep a close watch on the latest news to know when companies are making announcements, expansions or on the verge of shutting down so that you could sell your stock on time.

Jamaica Stock Exchange Basics: What is the stock market and how does it work?

Get valuable advice from seasoned investors and you can also understand more about how it works by reading world news related to investing in stocks/shares. Create and maintain a daily stock worksheet. The number one rule to successfully make a profit in the stock market is to be patient and make timely decisions on buying and selling, which is possible only when one is not hasty to make more money. Perseverance pays in the Jamaica Stock Exchange.

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