WEBVTT

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In the 1600s

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the Dutch East India Company 
employed hundreds of ships

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to trade gold, porcelain, spices, 
and silks around the globe.

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But running this massive 
operation wasn’t cheap.

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In order to fund their expensive voyages,

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the company turned to private citizens–

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individuals who could invest money 
to support the trip

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in exchange for a share 
of the ship’s profits.

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This practice allowed the company 
to afford even grander voyages,

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increasing profits for both 
themselves and their savvy investors.

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Selling these shares in coffee houses 
and shipping ports across the continent,

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the Dutch East India Company unknowingly
invented the world’s first stock market.

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Since then, companies have been 
collecting funds from willing investors

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to support all kinds of businesses.

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And today,

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the stock market has schools, careers,
and even whole television channels

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dedicated to understanding it.

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But the modern stock market is 
significantly more complicated

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than its original incarnation.

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So how do companies and investors
use the market today?

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Let’s imagine a new coffee company 
that decides to launch on the market.

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First, the company will advertise itself 
to big investors.

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If they think the company is a good idea,

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they get the first crack at investing,

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and then sponsor the company’s initial 
public offering, or IPO.

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This launches the company onto the 
official public market,

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where any company or individual who 
believes the business could be profitable

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might buy a stock.

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Buying stocks makes those investors 
partial owners in the business.

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Their investment helps 
the company to grow,

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and as it becomes more successful,

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more buyers may see potential 
and start buying stocks.

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As demand for those stocks increases,

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so does their price, increasing 
the cost for prospective buyers,

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and raising the value of the company's 
stocks people already own.

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For the company,

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this increased interest helps 
fund new initiatives,

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and also boosts its overall market value

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by showing how many people 
are willing to invest in their idea.

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However, if for some reason a company 
starts to seem less profitable

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the reverse can also happen.

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If investors think their stock 
value is going to decline,

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they’ll sell their stocks with the hopes 
of making a profit

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before the company loses more value.

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As stocks are sold and demand 
for the stock goes down,

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the stock price falls,

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and with it, the company’s market value.

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This can leave investors with big losses–

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unless the company starts to look 
profitable again.

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This see-saw of supply and demand 
is influenced by many factors.

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Companies are under the unavoidable 
influence of market forces–

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such as the fluctuating 
price of materials,

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changes in production technology,

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and the shifting costs of labor.

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Investors may be worried about 
changes in leadership,

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bad publicity, or larger factors like 
new laws and trade policies.

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And of course,

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plenty of investors are simply ready 
to sell valuable stocks

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and pursue personal interests.

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All these variables cause day-to-day noise
in the market,

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which can make companies appear more
or less successful.

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And in the stock market,

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appearing to lose value often leads 
to losing investors,

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and in turn, losing actual value.

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Human confidence in the market has the
power to trigger

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everything from economic booms 
to financial crises.

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And this difficult-to-track 
variable

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is why most professionals promote 
reliable long term investing

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over trying to make quick cash.

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However, experts are constantly 
building tools

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in efforts to increase their 
chances of success

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in this highly unpredictable system.

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But the stock market is not just 
for the rich and powerful.

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With the dawn of the Internet,

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everyday investors can buy stocks

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in many of the exact same ways 
a large investor would.

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And as more people educate themselves 
about this complex system

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they too can trade stocks,

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support the businesses they believe in,

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and pursue their financial goals.

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The first step is getting invested.