The perfect anatomy of investment, as it pertains to the buying and selling of assets such as stocks, bonds, and commodities is not that complicated. There are many actors like investors, traders, stockbrokers and fund managers in the world who try to manipulate this shubhodeep prasanta das market to attempt to profit from oncoming events. One must understand how the transactions go through when commissioning basic instruments such as stocks.
It is the manipulation of these actors where the complexity comes in. The law of supply and demand is often ignored by these actors and it is why the markets can be manipulated. The reason why we buy or sell a stock or a bond depends on what other investors are doing. If there are other investors who see that an asset can make them money, then they will soon join the bandwagon and increase demand for that asset. Here are some facts about investment to better understand this concept.
The Market
First of all, the market is made up of people who are making money. This is why the market can be manipulated by many actors. The market is like a giant machine where people buy and sell stocks, bonds and other assets. The reason why certain individuals have enough money to actually invest in the market is because they are making money from their regular jobs, interest on their savings or inheritance. One can invest in the market with cash or by using credit.
The Cycle of Investment
The cycle of investment continues on a daily basis for all assets. There are four basic states for any asset: Bought, Sold, Bought Stocks and Bought Bonds. The cycle is exponentially shorter in the case of stocks than in the case of bonds. This is because stocks are more volatile than bonds and if an event occurs, then investors can make or lose a lot of money with a single transaction.
No one wants to be on the losing side of investments such as stocks and bonds. They would rather be cautious and sell out at the wrong time, but it is not always easy to do that because it requires that one have enough information about specific situations before committing funds.
