---
id:"kb-2026-00429"
title:"Stock Market Basics"
schema_type:"TechArticle"
category:"business"
language:"en"
confidence:"high"
last_verified:"2026-05-22"
generation_method:"ai_assisted"
ai_models:["claude-opus"]
derived_from_human_seed:true
primary_sources:
  - title:"A Random Walk Down Wall Street (Malkiel, 13th Ed)"
    type:"book"
    year:2023
    url:"https://wwnorton.com/books/9781324035466"
    institution:"W. W. Norton"
secondary_sources:
  - title: "Retrieval-Augmented Generation for Knowledge-Intensive NLP Tasks"
    authors: ["Lewis", "Perez", "Piktus"]
    type: "academic_paper"
    year: 2020
    doi: "10.48550/arXiv.2005.11401"
    url: "https://arxiv.org/abs/2005.11401"
  - title: "MDN Web Docs — HTTP"
    type: "documentation"
    year: 2026
    url: "https://developer.mozilla.org/en-US/docs/Web/HTTP"
    institution: "Mozilla"
completeness: 0.88
ai_citations:
  last_citation_check:"2026-05-22"
---

## TL;DR

The stock market is a marketplace where shares of publicly traded companies are bought and sold. Major US exchanges: NYSE, NASDAQ. Indexes: S&P 500 (500 largest US companies), Dow Jones (30), NASDAQ Composite (tech-heavy). Historical average return: ~10% annually (S&P 500, 1926-2025) — but volatile.

## Core Explanation

Bull market: rising (up 20%+). Bear market: falling (down 20%+). Efficient Market Hypothesis (EMH): prices reflect all available info — you can't consistently beat the market (Fama, 1970 Nobel). Passive investing (index funds) beats active (stock picking) long-term (~90% of active managers underperform index over 15 years). Dollar-cost averaging: invest fixed amount regularly — reduces timing risk. Compound interest: 'Eighth wonder of the world' (Einstein, attributed).

## Further Reading

- [A Random Walk Down Wall Street (Malkiel, 13th Ed)](https://wwnorton.com/books/9781324035466)