When a company wants to raise money, they start selling their shares, which are called stocks. Company stocks can be sold via: Primary Market and Secondary Market.

1. Primary Market: In the primary stock market, a company, with the help of an investment banker, sells its first shares to investors. The selling of the company’s first stock is called an Initial Public Offering (IPO). Once a company has undergone an IPO, you can buy its stocks. In primary market, the investors are buying the shares directly from the company.

2. Secondary Market: In the secondary stock market, the company itself is not directly involved. These stocks are purchased from a stock exchange like NYSE, NASDAQ, or others. In this case, individuals like ourselves are buying stocks from other investors through the stock exchange.

Factors That Affect the Stock Market#

• Government Cycles

  • There is often uncertainty in the stock market during the final year of a government’s term.
  • In the first year of a newly elected government, stock prices are often volatile as the government is settling in.
  • In the second year, you can expect mild gains on stocks.
  • Typically, stock prices increase in the third year and then tend to decline in the fourth year(election year).

Stock prices are often influenced by government cycles, though this depends on economic conditions, policies, and global events as well. It is not hard and fast rule.

• Company Scandals
  • Scandals involving company owners can significantly decline a company’s stock price, especially in the age of social media.
  • In the past, without social media, scandals did not spread as quickly, but in today’s world, scandals can become mainstream, leading to rapid stock price declines.

Not all scandals have a long-term impact. Some might be short-lived depending on the company’s response and recovery.