Investing 102

[GregWeld]

Originally Posted by glassman

I guess the Dow, Nikkei, Nasdaq are all just measurement/averaging devices. My question was/is, How is the "Alibaba" traded? i guess the same goes for Sony, Toyota etc...I've never really thought about it before.

Who handles the purchase of the actual stock? A bank?, if this is waaaay back in the thread, well, i guess i'll reread...

Sorry for not being clear, my brain's weird.

The DOW -- is a "weighted average" of 30 stocks... each having a divisor assigned to it's stock that accounts for when stocks pay dividends or splits etc.

The Nikkei is the Japanese stock market - Actually called the Tokyo Stock Exchange - and is their "average" similar to our DOW.

The NASDAQ is ONE stock market here - the other is the NYSE aka: The New York Stock Exchange.

It used to be that the NASDAQ was electronically handled trades -- and the NYSE was actual people or "Designated Market Makers" and "Floor Brokers" that were on the floor handling trades... Now days there are fewer seats on the NYSE and many of the trades are done electronically - but there are still Market Makers... and Floor Brokers that represent the members on the floor. There are also what's known as Liquidity Providers that are members of the NYSE... and now you're getting complicated.

Your actual "trade" is handled by a "cleaning house" much the way a bank clears a check. The biggest I think is known as ICE (Intercontinental Exchange) - which owns the NYSE and the Euronext. You place your trade via a brokerage which is really much like a bank -- it has your money... the trade is either done electronically or via a market maker -- and then the actual paperwork behind the scenes is handled by a cleaning house.

NO MATTER WHAT though -- YOU own the share you buy. Even if the exchange was blown up (god forbid) or your brokerage went broke (hope that's not why they're called BROKErages). The shares are yours not anyone else's. The big boys are just facilitators.