Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price. Some exchanges are physical locations where transactions are carried out on a trading floor. They NYSE or New York Stock Exchange is an example of a physical exchange. You’ve probably seen pictures of they NYSE trading floor, in which traders are wildly throwing their arms up, yelling, and signaling to each other. Berkshire Hathaway, Apple, Amazon and JP Morgan Chase are examples of stocks that trade on the NYSE.
Alternatively, the other type of exchange is virtual, composed of a network of computers where trades are made electronically. The main electronic exchange is called the Nasdaq, or National Association of Securities Dealers Automated Quotations. This exchange lists and trades large companies such as Amazon, Alphabet, Cisco, Pepsi and Netflix.
The purpose of a stock market is to facilitate the exchange of securities between buyers and sellers, reducing the risks of investing.
The New York Stock Exchange
The most prestigious exchange in the world is the New York Stock Exchange (NYSE). The “Big Board” was founded over 200 years ago in 1792 with the signing of the Buttonwood Agreement by 24 New York City stockbrokers and merchants. Currently the NYSE, with stocks like General Electric, McDonald’s, Citigroup, Coca-Cola, Gillette and Wal-mart, is the market of choice for the largest companies in America.
- Invest in approximately 10 to 20 stocks in at least six to eight sectors with different investment characteristics.
- No more than 20% of the total value of your stock portfolio should be in any one sector.
- No more than 10% of the total value of your stock portfolio should be in any one stock.
Deciding which stocks to invest in can be difficult, especially if you have a low tolerance for risk. That’s why it’s important to define one’s financial goals and how much risk can be tolerated. Research stocks that fit within your strategy and invest in stocks that have the potential to help you meet your specific goals, whether you want investment growth, income, or a combination of the two.
Your Financial Advisor can provide you with a wide range of stock investing services, including:
- Asset allocation strategy development
- Individual stock selection
- Help in deciding when to buy and sell your stocks