The World Of Bulls And Bears 4 MIN READ | MAY 07, 2021

 

Stocks are for the Richies, said every human who assumes stocks to be gambling. But, it has been clear over time that the economy booms when the stock market is booming. What are stocks? Why does the market always rise and fall? 

I hear you ask. 

To understand the working of stocks, it helps to understand a very simple business.

Let’s take an example, say Tara, a baker who creates magic with homemade delicacies. With all the encouragement received, Tara wanted to try her luck in setting up her own bakery. To assemble the required funds, she had decided to take out a loan which was unfortunately refused to her. 

After searching for other ways of owning a business, she decided to welcome people who were interested to own a part of her business. Soon there were about 10 people interested in investing. With all the investments received, she has opened franchises in various cities and has seen some green stalks in the market soon. As a token of gratitude, she thought that it would be great to share the profits among the initial investors of her bakery.  

Here, the investors are called Primary Shareholders since they directly participated in the transactions of the organization. With a goal to hitch their wagon, she has issued an initial public offering.