The Stock Market
The stock market in the UK is a trading forum: a market for the trading of stocks and shares in a company or corporation. Every major economy has a stock market, with a stock-price index, which essentially indicates how well the companies that are 'floated' on the stock market are performing. A stock market provides a way for people to buy and sell fractions of a particular company's capital. A company can choose to sell shares in its business. These shares can be bought and sold on the stock market. The price of the shares will depend on how well the company is seen to be doing at that time; if the company is very successful, its shares will be expensive, if not, its shares will be cheaper. Professional traders try to make money by buying shares when they are cheaper and selling them when they become expensive. They trade shares on the stock exchange, based on how well they are doing in the stock market.
In the UK the main stock exchange indicator is the Financial Times Stock Exchange or FTSE, often pronounced 'footsie'. The FTSE is an independent organisation owned by the London Stock Exchange and the Financial Times. It publishes a range of indexes which track the share price fluctuations of a specific group of companies. The FTSE 100 index is an index based on the average share price fluctuations of the one hundred most valuable companies in the UK. Currently the FTSE 100 includes companies such as Cadbury and Marks & Spencer. Other oft-quoted UK indices include the FTSE 250, tracking the success of the two hundred and fifty most valuable UK companies (after those in the FTSE 100) and the FTAS, or FTSE All-Share, which essentially tracks the fortunes of all trading companies.
In the USA the stock market indexes tend to chart the fortunes of the 'blue chip' companies. Blue chip companies are those whose shares are established on the stock market and are seen to be very secure investments, perhaps because their ongoing success is all but guaranteed. Examples of blue chip companies include Coca-Cola and Disney. You may find that some UK indexes refer to certain companies as blue chip investments. This means that their shares are seen to be a very secure investment. These shares are unlikely to increase in value suddenly, but are also unlikely to suffer huge losses: over time they are almost guaranteed to give you steady investment returns.
For details of savings and investments linked to the success of the stock market, see Stock Market-Linked Savings.
