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· Posted on
February 21, 2024

What is the sharemarket?

People buy and sell shares on the sharemarket. But what actually is it?

What's the key learning?

  • Shares are bought and sold on sharemarkets.
  • The sharemarket is like a massive department store - it bring together buyers and sellers in publicly traded companies.
  • The sharemarket operates a bit like a live auction that is constantly moving.

Public companies like CBA, Telstra or Afterpay list their shares on what's called a sharemarket. And these sharemarkets, also called stock exchanges, are where the public (aka you and me) can buy their shares.

In Australia, we have the Australian Securities Exchange (or the ASX for short). Overseas, there's the New York Stock Exchange (NYSE) and the London Stock Exchange (LSE) the Shanghai Stock Exchange (SSE) - and tonnes more.

You can think of a share market like a huuuge online department store, where buyers and sellers come together to buy and sell shares in publicly-traded companies.

And it works kind of like an auction: buyers and sellers bid at the same time. The price at which the stock trades is the highest price the buyer is willing to pay, and the lowest price the seller is willing to accept.

And, back in the good ol' days, this was all done in-person. Have ya seen Wolf of Wall Street? Sweaty stockbrokers would take phone calls and scream at screens in offices to buy and sell stocks for the public.

But fast-forward to today, and we have ~technology~ which allows us to do it on our own, from pretty much anywhere. You can still get a stockbroker or a financial adviser to pick and place a trade for you (for a price), or you can DIY and buy your own shares through trading platforms like CommSec or Superhero.

What shares you buy depends on your financial strategy. Are you investing for the long-term, or the short-term?

Remember, be clear about your financial goals before you invest. And, make sure that your emergency savings fund is looking healthy before you jump in.

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