By selling stock, corporations raise the money that is necessary to start their businesses and keep them growing. Investors in stocks may make a profit in two ways: by receiving dividends, a payment made by corporations to stockholders; and by selling the stock for more than they paid for it. The difference is called a capital gain. However, purchasing stock is risky. The stock price may decrease. Investors who sell their stock for less than they paid for it experience a capital loss.
Stock is bought and sold in markets called stock exchanges. When people talk about "the stock market" they usually mean the New York Stock Exchange (NYSE), the largest in the country. The performance of the NYSE is often measured by the performance of the few stocks included in the Dow Jones Industrial Average, or "The Dow." When the stock market rises steadily over a period of time, a bull market exists. When it falls for a period of time, people call it a bear market. During the bull market of the 1920’s, there was a great amount of speculation, high-risk investment with borrowed money in hope of big returns. This period ended in the stock market collapse called the "Great Crash" of October 1929. Another great bull market occurred in the 1990s and ended in 2000.
