If you're looking at investing in the stock market, you'll need to know some fundamental facts about stocks to succeed.

In its simplest form, the stock market's like knowing the exact amount of chilli to add to your recipe.

You don’t want something too bland, or something so hot that it sets your mouth on fire.

Knowing the right amount requires knowledge and experience.

If you want to succeed in the stock market, and at cooking–then knowing the right formulas will help!

Keep reading this article to understand the 25 most important facts about the stock market before making your first investment.

#1. The Stock Market Is More Than 400 Years Old

The stock market is one of the oldest forms of investment in the world¹.

It's believed that the Dutch East India Company created a rudimentary form of the stock market back in 1602, known as "stocks."

#2. There Are More Than 60 Stock Exchanges in the World

In modern times, there are more than 60 stock exchanges in the world.

The most famous of them is called NYSE Euronext, and it's located on Wall Street.

There are also other big players like NASDAQ² and hundreds of smaller ones that help to support financial markets all over the planet.

#3. Annually, The Stock Market Is Likely to Increase by 70%

There is a 70% chance the stock market will go up in any particular year, and only about 30-40% odds of it going down.

This makes it an attractive investment for many people who want to make money from their savings.

#4. October Is the Most Volatile Month

Many people believe that October is a very volatile month for stocks³.

This isn't really based on any facts other than a couple of October stock market crashes that happened in 1929 and 1987.

So, basically, October has just got a bad reputation when it comes to stocks.

A CFRA⁴ report actually found that stocks have traditionally risen in October, resulting in an average gain of 0.9% for the S&P 500 since 1945⁵.

#5. September Is the Worst Month

September is believed to be one of the worst months for stocks.

Probably the most influential factor is that most mutual funds end their fiscal years at the end of September and dump losing positions so as not to look bad to their shareholders.

Another theory is that investors believe September will be a bad month and sell stocks in anticipation, causing prices to drop.

#6. The Most Expensive Share Is Berkshire Hathaway

The most expensive share in the world is Berkshire Hataway⁷.

It has a current net worth of about £545 billion⁸.*

* While we regularly review our figures, these may have shifted since our last update.

#7. The Earliest Stock Exchange Book Dates From 1688

The earliest stock exchange book was "Confusión de Confusiones", written by ​Joseph de la Vega in 1688⁹.

The book is based on the Amsterdam stock exchange and involves a stock trader explaining the workings of the market to a merchant and a philosopher.

#8. The First Stock Market Bubble Dates From 1720

A lot of people believe that the first stock market bubble happened back in 1720.

This happened when John Law created an investment bank with shares issued for it, but he also printed more money to invest¹⁰.

The result was that prices boomed and then quickly collapsed.

This led to many other speculation-driven bubbles over the next century or so.

#9. Microsoft Breached the $1 Trillion Threshold

In April 2019 Microsoft became the third company to reach the $1 trillion valuation figure, with Apple and Amazon coming in first and second, respectively¹¹.

Apple, Inc. reached this milestone in August 2018, whilst Amazon.com, Inc. hit this figure in September 2018.

#10. Continued Growth of the Top 100 Market Capitalisation

Latest statistics show that there is continued growth in the market capitalisation amongst the top 100 companies.

Despite the volatility of the economy these past few years, market capitalisation has risen to about £29 tn* as at March 2022¹².

* Although we constantly review our figures, these may have changed since our last update.

#11. Even Pirates Have a Stock Market

The pirate stock exchange was officially founded in 2009 in Harardhere, Somalia¹³.

It's difficult to confirm the number of maritime operations listed on the Harardheere Pirate Stock Exchange due to a lack of credible statistics.

However, over 70 distinct maritime operations have been reported by The Wall Street Journal.

12. The Stock Market Recovers Relatively Quickly

The stock market is generally able to recover relatively quickly after it crashes.

In the 1930s, for example, it took about four years before stocks went up again following a crash in 1929 and subsequent depression of the economy due to The Great Depression¹⁴.

#13. There Are More Mutual Funds Than You Think

There are more mutual funds than you might realize.

Common mutual funds include:

• Stocks
• Bonds
• Money market funds
• Balanced funds

#14. Shares Were Traded With Fractions

Shares were traded with fractions until 2001¹⁵.

This means that an investor who bought a share at £100 might have owned 0.004 of the company instead of just one whole share.

#15. The Dutch East India Company Was the First Multinational Corporation in Existence

The Dutch East India Company was the first multinational corporation in existence, and it traded everything from spices to silk, which made its stock very valuable¹⁶.

#16. Calculated Risks Usually Mean More Rewards

People make money in the stock market by buying stocks¹⁷ of companies they think are undervalued and will eventually appreciate.

They can also buy options contracts or use margin lending to magnify their returns on investments.

#17. You Have Many Options When It Comes to Trading Stocks

Shares of stocks trade on the stock market.

This is where they can be bought and sold depending on what people are willing to pay for them at a given time.

Shares also trade in individual companies, but only among those who have ownership stakes in that company's shares (i.e., shareholders).

#18. Buy Low & Sell High

The most basic way to make money in stocks is to buy low and sell high¹⁸.

All this means is that you buy stocks when they are at their cheapest and you sell them when you believe they have reached their peak price point.

Your profit is therefore the difference between your purchase price and your sale price.

#19. Stock Charts Don't Have To Be Hard

A stock chart is a graphical representation of how the price of a stock has changed over time.

Charts are useful because they can help people make better decisions about when to buy and sell stocks, as well as which ones might be suitable for investment.

#20. There's No Such Thing As a Sure Thing

Stock analysts often make predictions about whether a company's stock will go up or down.

However, there is no such thing as a sure thing when it comes to predicting the future of stocks.

#21. There's No Perfect Metric

There are a number of different metrics analysts use to judge whether or not stocks will be profitable.

However, there is no "perfect" metric that can predict future stock performance with certainty.

#22. Dividends Are Your Most Trusted Friend

Dividends are payments that companies make to their investors.

They're a way for the company's profits - and the investor's investment - to grow at a regular rate, rather than relying on price changes in order to see growth.

#23. There's More to Stocks Than Just the Price Tag

One of the most common misconceptions about stocks is that a $100 stock must be more expensive than a $20 stock.

In reality, it's fairly typical for companies with lower market capitalizations to have higher price-to-earnings ratios¹⁹.

#24. Taxes Can Cut Into Your Profit

You may be liable to pay Capital Gains Tax if you make a profit when you sell shares²⁰.

There are instances when you won't be required to pay taxes, such as when gifting shares to a spouse, partner or charity.

#25. Assess Your Needs & Goals

It's important to know what type of stocks you're buying, and how much the commissions will be.

Some brokers offer commission-free trades for verified accounts or if you deposit a minimum amount into your account each month.

Common Questions

In Conclusion

The stock market is a volatile place, but it can be rewarding if you understand the risks and rewards.

Investing in stocks will always have its ups and downs. A long-term plan is a good ingredient for success.

Do your research and know all the facts about stocks before diving into investing for the first time. 

References

• www.altitudews.com.au/14-amazing-facts-about-the-stock-market/
• www.thepoorswiss.com/stock-facts/
• www.investedwallet.com/stock-market-statistics/
• www.fool.com/investing/2020/10/10/11-hard-to-believe-stock-market-facts/
• www.groww.in/blog/interesting-facts-about-the-stock-market/
• www.investopedia.com/financial-edge/0411/5-essential-things-you-need-to-know-about-every-stock-you-buy.aspx
• www.forbes.com/sites/steveschaefer/2016/01/05/10-things-you-absolutely-need-to-know-about-stocks/
• www.familyfinancemom.com/investing-in-stocks-101/
• www.smartmoneymamas.com/stock-market-101/
• www.stockstotrade.com/10-questions-beginner-investor/