How the stock exchange works (for dummies)
The stock market is the complex financial system currently raping your wallet and spitting in your childrens face. We here about it on the news everyday, noramlly in the section after the real news about before the sports, or as I like to call it “the void of disinterest”. But how does it actually work?
I don’t know, but I have a rough idea so I’ll try and explain that rough idea in a mildly amusing manner.
SKETCH STARTS HERE!
International Trader 1- BUY BUY BUY! We’re all going to be rich (by all I mean the tiny 1% of people rich enough to have any stake in the stock market to begin with)
International trader 2 - Say trader 1, that’s some nice stock you just bought. I’ll buy it off you for a lot more money.
International trader 1 - Alright, that’ll be many billions of dollars!
2 - You’re on! I don’t actually have several billion dollars but I have “credit” will that do? It’s like money except it doesn’t actually exist.
1 - Sure, as long as I eventually get my several billion dollars
*DEAL TAKES PLACE*
2 - Look at all of my stock! I’m rich! (rich in stock that is, not cash rich which is a tangible measure of income as opposed to numbers on a screen or bits of paper)
1 - Jumpin’ Jack Flash! Look t all the stock you’ve got. I’ll buy some off you for several billions of credit!
2 - Credit is the same as money, only imaginary …YAY!
*DEAL TAKES PLACE, SEVERAL BILLION NOTHINGS EXCHANGE HANDS*
Economist - Hmm, looks to me that those bit of paper and numbers on a screen aren’t worth as much as I said they would be several months ago. I predict everyone will sell their stock in the next few weeks based on complicated sums!
1&2 - Oh no! Complicated sums! I better sell all my stock and turn my credit into actual money
1- Hey fellow traser, those several billions you owe me. Do you have them in pounds?
2 - No I only have credit, do you have pounds?
1 - No neother of us actually has any money?
2 - Well who does have money?
1 - I know who. Poor people! They keep their real money in things called banks. Instead of buying soccer franchises or organizing military coups.
2 - Great, we’ll go to the bank and get our real cash money for credit!
1&2 - YAY! We’re still ridiculously rich!
*BANK DOES DEAL, SEVERAL BILLION NOTHINGS EXCHANGED SEVERAL BILLION POUNDS OF OTHER PEOPLES ACTUAL MONEY*
Poor person 1 - So I have no money in my account because?
Bank Manager - Irregularities in the stock market….
*END*
You could spend all day pointing out “that’s not actually how the stock market works blah blah Sarkozy blah lehman brothers blah blah” save it for the cocaine party 80’s boy. Essentially the stock market is a lot of numbers, floating in a pool of brain juice whilst Gordon Gecko wannabes shout buy and sell depending on whatevers popular that day.
Ta
x.
