Market Watch: Regulation of the Stock Market

Market Surveillance: Stock Market Supervision Enrons and Worldcoms have revealed that without the regulatory authorities financial markets can not stay under the auspices of company directors and senior officials. "Enron 's corporate abuse and fraud are not the first on financial markets, but of course it is the first for stockholder loss and public confidence in the financial industry (Bequai 2003)" This year' s stock market crash Has enacted laws such as the Securities Act of 1933 and the Securities Exchange Act of 1934 to prevent the act of causing Enron's collapse.

In a nutshell, the history of regulation could be related to the stock market crash of 1929, which resulted in its actions and crash - a decade of economic downturn. The overall goal of regulation can be summarized as prohibiting asymmetry of information or misuse of erroneous information. A more specific version is to protect investors, maintain a fair and orderly efficient market, and promote capital formation. Activities involving the participation of individual investors are subject to the strictest management because the risk of information asymmetry is the highest. There is a popular conspiracy myth that the existence of securities regulations forces the intermediary's private use and eliminates them from the most attractive opportunities on the market - unfortunately, this is similar to the myth of exceptional risk-free return It is.

Before you make your first investment, take time to learn the stock market fundamentals and the individual securities that make up the market. There is an old maxim: it is a stock market, not a stock market. Unless you buy an exchange fund (ETF), your focus is individual securities, not the entire market. The number of times each stock moves in the same direction is small, and even if the average value falls by more than 100 points, the stock price will rise depending on the company.

Thousands of shares are traded in the United States and around the world. Several so-called indexes are set up to keep track of how certain parts of the stock market (or the entire stock market) are being done. There are indexes that track large companies, small businesses, the entire stock market, etc. One of the most common indices is S & P 500, S & P 500. It represents a wide section of 500 US large companies.