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Guide · Stocks

What Are Stock Markets and Shares? Core Concepts

What exactly is a share, how do stock exchanges work, and why are indices like the S&P 500 so important? A plain introduction for beginners.

What is a share?

A share (or stock) is a security representing partial ownership in a company. When you buy a share, you become a tiny co-owner of that company and participate in its profits (dividends) and any increase in its value (capital gains).

What does a stock exchange do?

  • Lets companies raise capital to grow (initial public offering — IPO).
  • Gives investors a fast way to buy and sell shares (secondary market).
  • Provides transparent price discovery — everyone sees the same price.
  • Enforces corporate governance and reporting standards.

Major global exchanges

  • NYSE (New York Stock Exchange): The largest exchange in the world. Home to Apple, JPMorgan and Berkshire Hathaway.
  • NASDAQ: The tech-heavy US exchange. Microsoft, Google, Amazon and Nvidia trade here.
  • LSE (London): Europe's largest exchange.
  • Tokyo, Shanghai, Hong Kong: The leading Asian exchanges.
  • Frankfurt, Toronto, Sydney: Other major global venues.

What is an index?

An index is a basket of shares that measures the average performance of a group. Instead of following every stock, a single number tells you where the market is heading.

  • S&P 500: The 500 largest US companies.
  • Dow Jones: 30 large US industrial companies.
  • NASDAQ 100: 100 large, mostly tech, companies.
  • DAX 40: Germany's 40 biggest listed companies.
  • FTSE 100: The UK's 100 biggest listed companies.

Dividend vs growth stocks

  • Dividend stocks: Mature companies that regularly pay part of their profits to shareholders (Coca-Cola, Johnson & Johnson).
  • Growth stocks: Companies reinvesting profits to grow fast instead of paying dividends (Nvidia, Tesla, Amazon).

What moves prices?

  • Company earnings and growth expectations
  • Interest rates (higher rates pressure equities)
  • Economic growth and unemployment data
  • Sector trends (AI, green energy, defense)
  • Geopolitics and regulation

Live tracking

Track live prices of major shares across the world on the NexPrices Stocks screen, and set alerts for key levels.

Disclaimer

Investing in shares involves the risk of capital loss. This article is for educational purposes only and is not financial advice.