‘Playing’ the Stock Market
Just Who Plays This Game?
Apart from investors (which we have talked about in previous issues of OINK!) have you wondered who the people are who ‘play’ the stockmarket? In other words, who actually buys and sells the shares, and how do you receive advice on what to buy and what to sell?
The stockmarket´s main players are the analyst, the stockbroker and the trader.
The simplest way to look at it is this: THE ANALYST is the person who looks at information and forms an opinion. He studies the companies, sees how well they have done, or not, how well they might do and proposes any information he thinks might be important to the investor. Remember that shares in the stockmarket are actually shares of companies. Therefore, to figure out whether to buy or sell a share, you would need to study the company itself. The analyst does this for you – they form an opinion and pass this to…
THE STOCKBROKER (also called a broker), passes on information and advice he has received from his analysts on the different shares to his investors. The advice usually consists of which shares to buy and which shares to sell. But in order to actually buy or sell a share, the broker depends on…
THE TRADER who does what the name says; he (or she) trades. Trading essentially means buying and selling shares in the stockmarket. The trader is the person who is in the stockmarket building, or Stock Exchange. The traders work from the trading floor. You might have seen the stockmarket and traders in a movie and it looks frantic; masses of people grouped together, shouting “buy, buy, buy” or “sell, sell, sell” at each other, making weird hand signals and writing notes down on paper. Watch out for it next time, you will probably understand it a little better having read through this and past issues of OINK!
So, as you can see, there are various groups of people in the stockmarket, all working together, like links on a chain, each with their own specific role. Without them, there would be no stockmarket. In much the same way as there would be no school if there were no teachers, headmasters, students, secretaries or janitors..... which could be fun, but then again, how would you learn about new things and meet your friends otherwise!?
By Alain Benaim
(Alain Benaim is a seasoned investment banker