00:00In the 1600s, the Dutch East India Company employed hundreds of ships
00:11to trade gold, porcelain, spices, and silks around the globe.
00:16But running this massive operation wasn't cheap.
00:19In order to fund their expensive voyages, the company turned to private citizens,
00:24individuals who could invest money to support the trip
00:27in exchange for a share of the ship's profits.
00:30This practice allowed the company to afford even grander voyages,
00:34increasing profits for both themselves and their savvy investors.
00:39Selling these shares in coffeehouses and shipping ports across the continent,
00:44the Dutch East India Company unknowingly invented the world's first stock market.
00:50Since then, companies have been collecting funds from willing investors
00:54to support all kinds of businesses.
00:56And today, the stock market has schools, careers, and even whole television channels
01:02dedicated to understanding it.
01:03But the modern stock market is significantly more complicated
01:07than its original incarnation.
01:09So how do companies and investors use the market today?
01:14Let's imagine a new coffee company that decides to launch on the market.
01:18First, the company will advertise itself to big investors.
01:22If they think the company is a good idea,
01:24they get the first crack at investing and then sponsor the company's initial public offering,
01:29or IPO.
01:31This launches the company onto the official public market,
01:34where any company or individual who believes the business could be profitable might buy a stock.
01:40Buying stocks makes those investors partial owners in the business.
01:43Their investment helps the company to grow, and as it becomes more successful,
01:48more buyers may see potential and start buying stocks.
01:51As demand for those stocks increases, so does their price,
01:55increasing the cost for prospective buyers,
01:58and raising the value of the company's stocks people already own.
02:02For the company, this increased interest helps fund new initiatives,
02:06and also boosts its overall market value,
02:09by showing how many people are willing to invest in their idea.
02:13However, if for some reason a company starts to seem less profitable,
02:17the reverse can also happen.
02:19If investors think their stock value is going to decline,
02:22they'll sell their stocks with the hopes of making a profit,
02:25before the company loses more value.
02:27As stocks are sold and demand for the stock goes down,
02:31the stock price falls, and with it, the company's market value.
02:35This can leave investors with big losses,
02:37unless the company starts to look profitable again.
02:41This seesaw of supply and demand is influenced by many factors.
02:45Companies are under the unavoidable influence of market forces,
02:49such as the fluctuating price of materials,
02:51changes in production technology,
02:53and the shifting costs of labor.
02:56Investors may be worried about changes in leadership,
02:58bad publicity,
02:59or larger factors like new laws and trade policies.
03:03And of course, plenty of investors are simply ready to sell valuable stocks
03:07and pursue personal interests.
03:09All these variables cause day-to-day noise in the market,
03:13which can make companies appear more or less successful.
03:16And in the stock market, appearing to lose value
03:19often leads to losing investors,
03:21and in turn, losing actual value.
03:23Human confidence in the market has the power to trigger everything
03:27from economic booms to financial crises.
03:30And this difficult-to-track variable is why most professionals
03:34promote reliable long-term investing over trying to make quick cash.
03:38However, experts are constantly building tools in efforts
03:41to increase their chances of success in this highly unpredictable system.
03:46But the stock market is not just for the rich and powerful.
03:49With the dawn of the Internet, everyday investors can buy stocks
03:52in many of the exact same ways a large investor would.
03:56And as more people educate themselves about this complex system,
03:59they too can trade stocks, support the businesses they believe in,
04:03and pursue their financial goals.
04:05The first step is getting invested.
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