Equities and Stock Markets

Abstract

Ask 100 laypeople what first comes to mind when they think of investing, and chances are “stocks” and a “stock market” will be in a plurality of answers. Stocks occupy many of the headlines of financial newspapers and much of the airtime of financial radio and TV shows, and the ups and downs of “the market” seem to get more popular attention than daily moves in interest rates or the price per square foot of office space. Part of this is simply due to the availability of information: stock prices, like interest rates but unlike real estate, are quoted and traded on many times every second during business hours, and unlike most bond trades, stocks provide at least the widespread expectation of being able to double one’s investment relatively quickly. Beyond their “excitement” and volatility, stock do play an important role as one of the key asset classes both individual and institutional investors allocate money to for long-term real returns, alongside stocks and real estate.