The ‘Market’ as we refer to it, is the collective embodiment of every person willing to buy or sell something. In the investment world, the ‘Market’ typically refers the ‘Stock Markets’ where stocks (usually ownership shares of companies) are bought and sold. Millions upon millions of people participate in the buying and selling of stocks each day around the world.
The Mixing Bowl
Every single market participant (investor) has a view of how a stock should be priced, they then act accordingly, either buying, selling, or doing nothing. The effect this has on the market is that the price of a stock at any given point in time incorporates all the information which the millions of investors have. The market essentially acts like a mixing bowl; mixing opinions from around the globe into one final product; a price.
Your choice as an investor is to either compete and outguess the collective knowledge of all the other investors, or harness the power of their knowledge and embrace the prices set by the market. Let markets work for you.
For more information see our post: You, The Market, and The Prices You Pay
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Image Attribution: Dimensional Fund Advisors