Definition: The stock market is the collection of physical and electronic markets where buyers and sellers come together to trade shares. Most of the world's stock trading happens through stock exchanges. Think of the stock market like one giant auction, then stock exchanges are like individual auction houses.
Key Takeaway: The stock market is made up of all individual stocks, so when individual stocks move, the market moves.
Fun Fact: Although U.S. stocks may lose money in a given year, they have always bounced back. Returns on the S&P 500 have never been negative over a 20 year period.
Watch the video below for another look at this concept.
How does the stock market work?