What are clients asking their advisors lately? Our network of expert financial advisors field questions from our community. Sophisticated content for financial advisors around investment market value ratios investopedia forex, industry trends, and advisor education.
A celebration of the 100 most influential advisors and their contributions to critical conversations on finance. The latest markets news, real time quotes, financials and more. What is ‘Market’ A market is a medium that allows buyers and sellers of a specific good or service to interact in order to facilitate an exchange. This type of market may either be a physical marketplace where people come together to exchange goods and services in person, as in a bazaar or shopping center, or a virtual market wherein buyers and sellers do not interact, as in an online market. Market can also refer to the general market where securities are traded. BREAKING DOWN ‘Market’ Markets may come in the form of physical locations where transactions are made, which may exist as anything from thrift or boutique stores selling individual items to wholesale markets selling goods to other distributors. Yet, markets do not necessarily need to be a physical meeting place.
How Markets Work Markets establish the going rates for goods and other services, which sellers determine by creating supply and which buyers determine by creating demand. A market is a focal center for the distribution of goods and resources within a society, though they are not always deliberately created. Markets may emerge organically or as a means of enabling ownership rights over goods, services and information. Markets vary widely for a number of reasons, including the kinds of products sold, location, duration, size and constituency of the customer base, size, legality and many other factors. For example, the term black market refers to an illegal market.
Yet, like markets in general, a black market can be a physical market where illegal goods are traded in person or a virtual market where illegal goods are traded with relative anonymity. Because a market may often be bound to a geographic region, nation or state, even when the market in question is not physical, it is subject to rules and regulations set by a regional or other governing body that determines the market’s nature. The theoretical optimally functioning market is one experiencing perfect competition, a condition in which no individual party or other entity within the market is powerful enough to determine the price of a particular good or service. In addition, though only two parties are needed to make a trade, at minimum a third party is needed in order to introduce an element of competition and bring balance to the market. Many of these markets manifest themselves in the form of exchanges. Generally speaking, the existence and prevalence of these various forms of securities markets are characteristics of a free market economy. Check out the similarities and differences between the two markets.