Why is the Stock Market Important to Everyone?

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Why is the stock market important to everyone?
“I don’t own any stocks, bonds, or mutual funds. Why should I care about the stock market? If that is your opinion, perhaps this video can help you find answers.
What is the Stock Market?
You might have heard of the stock market, but just what is the stock market?
A stock market is a public market where people can buy and sell shares on a stock exchange. Think of it as a mall where people can buy and sell stocks.
The shares of stock represent ownership of a company. If you buy as little as one share you are a part owner in that company. You have a voice that can vote about issues with a company.
The value of the shares fluctuates each day. The share's value may go up, down, or stay the same.
Why do Stock Markets Exist?
Stocks markets have existed for hundreds of years. Trading between people has occurred ever since people have existed.
Stocks provide companies with a source to raise capital for investment and expansion. When a company is created, typically, stock is also created. At first, the stock is privately held. In order to raise money and gain notoriety, a company may decide to sell-off part ownership. This can be used to expand, hire employees, develop new products, pay off debt, etc. The shares can be bought or sold by any qualified person. The company becomes a publicly-traded company when it has an Initial Public Offering or IPO. The shares are listed on a public stock exchange.
Stock markets can help create personal wealth. Many people, such as Warren Buffet, have used the stock market to accumulate great wealth.
Stock markets can help increase investments in the economy. During good economic times, investing will usually increase, and during bad times, it will likely decrease.
Currently, the economy has done well despite the COVID-19 pandemic. Monetary and fiscal policies have been enacted to stimulate the economy and help keep the stock market healthy. Some are concerned about inflation and hyperinflation.
The stock market can serve as an indicator of the state of the economy. As an economy expands and contracts, often the stock market will do the same.
The 1929 stock market crash was a point in time that is considered to have started The Great Depression.
The stock market does not operate in a vacuum. There are other types of markets. Geopolitical and domestic events can impact the stock market.
The stock market can be very good at predicting future expectations. Stock prices are based on future expectations, not on what has already happened. If the outlook is bright, prices will rise. If the outlook is bad, prices will fall.
A strong and dependable stock market produces confidence in the economy. Domestic and foreign investors will participate.
The stock market affects non-investors in the economy. As the stock market and economy expand and contract, this can impact consumer prices, job availability and security, and benefits.
Why Should I Care?
Everyone is affected by the stock market regardless of whether or not they invest in stocks. Jobs, pension funds, and retirement account values are tied to the stock market.
Will your retirement plans change if the stock market declines?
If the stock market goes up or down, this can impact employee benefits, such as pensions and perks being either increased or reduced.
Stocks are created in the primary market. They trade in the secondary market.
Consumer trends are constantly changing. What was once popular may not be popular now. This can be seen in the move from train travel to cars and airplanes. Technology advances and what was once considered cutting-edge is dropped or replaced with new and improved ways to do things. The economy changes over time.
Housing values go up and down with the stock market and economy. Most people have most of their wealth in their homes. If values fall, this can be bad. As values increase, people see their personal wealth increase.
Interest Rates
As the stock market goes up, interest rates usually go up as well. This is contrary to what most believe. In a rising economy, interest rates must be raised to help prevent inflation or hyperinflation.
Interest rates impact mortgage rates, rent payments, loans, and credit card rates.
A Word of Wisdom
Paying attention to the stock market will often allow you to anticipate and prepare for things before they happen.
By the time any significant stock market movement, especially a crash, becomes headlines news, it is too late, and the move is almost over.
Even if you are not an active investor, watching the stock market can help you make better decisions. What is the trend? Don’t wait until it is too late.