How the Stock Markets Work

by Colin Chapman

How the Stock Markets Work has long been an established favourite for anyone who needs a straightforward, accessible introduction to the stock markets. This guide concisely explains how the stock markets have developed as well as how they operate today and is a must-buy for anyone looking to learn more about this sector of the financial industry.

This new edition has been updated and revised throughout.

272 pages, Paperback

First published October 10, 1991

About the author

There is more than one author in the Goodreads catalog with this name. This entry is for Colin ^2 Chapman.

Colin Chapman is a leading financial writer and the former chief executive of Financial Times Television.

Reviews

[Zayn · Rating 5 out of 5]

Really enjoyed it as well as being incredibly informative.

[Stephen Clarke · Rating 5 out of 5]

This is an interesting book in a nice series of books on investing. The overall aim of the book is to prove that if you plan to invest then you need to think long term and forget about the noise. Even on the time-scale of a few years you can be lured into "playing the market". As it sees it, the key is to find something low cost, transparent and simple. While other schemes may make a lot of money in one year, it may perform disastrously in another year. In the short term, you or any other fund manager may be able to beat the market but in the long term it is almost impossible. The evidence is provided in this book.

The book is written in simple language and should be understood by the layman. There are graphs/ charts to explain key points and plenty use of numbers but that shouldn't put anyone off. People whom are interest in finance and investing may be disappointed that this book doesn't provide any secret tip for beating the market. Instead the whole point of this book is to simply buy the market. While this is an index-tracking fund, the author's preference is towards mutual funds rather than ETFs. There is a crucial difference as ETFs have counter-party risk. this book isn't simply advocating using an index fund but rather the mutual fund structure in particular.

One thing that may not be so obvious from this book is that while price can go down you shouldn't necessarily worry as companies will still pay dividends, even in a 'flat' market companies will still pay dividends which adds up significantly over time. To be clearer, the author highlights the importance of dividends but (from memory) he didn't expound the previous point that dividends count for a lot when the market is flat. When you become fixated on price you will only look at capital appreciation (price change) instead of the most important figure which is total return. This book points out that the reinvestment of dividends is where the long-term 'magic' lies.

[Andres Rodriguez · Rating 1 out of 5]

Should be called a short history lesson of the stock market

It's about how the stock market came to be ...that's it no tips on how or when to do things with stock or how it is today in the US or around the world the book ends in London so it's about how it started and became the London stock exchange. Not worth 2.99 or free waste of time can probably Google it and get more info