What is the use of a Stock Market in general?
A stock market allows owners of stocks and shares to dispose of them at a fair price, it allows new investors to buy them at a fair price, and it allows companies to sell new shares to finance the growth of their businesses. Most new investment is by or for people saving up for their retirement. People buy stocks and shares with the expectation that they will be able to sell them again, unlike companies who generally issue stocks with no expectation of ever having to buy them back. This means that older people selling their shares when they retire have to dispose of them, not to the companies that issued them, but to younger people who are building up their savings. This process cannot take place unless there is a reliable marketplace in which to buy and sell. A further benefit of a market is that it provides a basis for valuing businesses, whether for the purposes of stock trading, or for establishing credit with banks and other lenders, or for negotiating mergers and acquisitions.
