u.s._stock_exchanges [CapiPedia]

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====== U.S. Stock Exchanges ======
U.S. Stock Exchanges are organized marketplaces where the shares of American [[publicly traded company|publicly traded companies]] are bought and sold. Think of them as the grand central stations of American capitalism, connecting companies hungry for cash to grow their business with investors looking to own a piece of that growth. When a company decides to "go public" through an [[initial public offering (IPO)]], it lists its shares on an exchange, allowing millions of people to trade them. These exchanges are the engine of [[capital formation]], enabling businesses to raise money for new factories, research, and jobs. They also provide investors with [[liquidity]]—the ability to easily buy or sell their shares. The entire system is overseen by a powerful watchdog, the [[U.S. Securities and Exchange Commission (SEC)]], which works to ensure fair and orderly markets and protect investors from fraud. For the average investor, these exchanges are the primary gateway to building wealth through stock ownership.
===== The Big Players: NYSE vs. Nasdaq =====
While the U.S. has several exchanges, two titans dominate the landscape: the New York Stock Exchange and the Nasdaq. They are like the Coke and Pepsi of the stock market world—both serve a similar purpose but have distinct flavors and histories. Understanding their differences can give you a better feel for the companies you invest in.
==== The New York Stock Exchange (NYSE) ====
Often called the "Big Board," the [[New York Stock Exchange (NYSE)]] is the picture that comes to mind when you think of a stock exchange—the iconic building on Wall Street with frantic-looking traders. Founded in 1792, it's the home of many of America’s most established, iconic corporations.
  * //Prestige and History//: Listing on the NYSE is often seen as a mark of corporate prestige and stability.
  * //Company Type//: It tends to list older, larger, and more mature companies, often referred to as [[blue-chip]] stocks. Think Coca-Cola, Walmart, and Johnson & Johnson.
  * //Trading Model//: It operates on an auction market model, historically centered around a physical trading floor. A single [[Designated Market Makers (DMMs)|Designated Market Maker (DMM)]] for each stock is responsible for maintaining a fair and orderly market.
==== The Nasdaq Stock Market ====
The [[Nasdaq Stock Market]] is the new kid on the block, relatively speaking. Born in 1971, it was the world's first electronic stock market, forgoing a physical trading floor for a network of computers. It quickly became the destination for the new wave of technology and growth-focused companies.
  * //Tech-Heavy and Modern//: Nasdaq is synonymous with technology and innovation. It's home to giants like Apple, Amazon, Microsoft, and Google (Alphabet).
  * //Company Type//: It's the preferred exchange for technology, biotechnology, and high-growth companies looking to make their mark.
  * //Trading Model//: It uses a dealer's market where multiple [[market makers]] compete to buy and sell shares by posting their own quotes. This competition is intended to create narrower price spreads and increase efficiency.
===== Why Do Stock Exchanges Matter to a Value Investor? =====
For a disciple of [[value investing]], a stock exchange isn't a casino for quick bets. It's a tool—a vast, sometimes chaotic, but ultimately invaluable resource for finding bargains.
==== A Supermarket of Opportunities ====
Imagine a colossal supermarket with thousands of products on the shelves. The supermarket itself (the exchange) doesn't tell you which products are high-quality or on sale. That's your job. The exchange simply provides a centralized, regulated place where you can efficiently browse, analyze, and purchase ownership in thousands of different businesses. A value investor's task is to walk these aisles, ignore the flashy packaging, and use fundamental analysis to find the high-quality goods that have been mistakenly marked down.
==== Liquidity and Mr. Market's Mood Swings ====
The most important service an exchange provides is liquidity. This means you can almost always find a buyer when you want to sell and a seller when you want to buy. This is critical for exploiting the allegory created by [[Benjamin Graham]]: the famous [[Mr. Market]].
Mr. Market is your manic-depressive business partner who stands outside the exchange every day, offering to buy your shares or sell you his at wildly fluctuating prices. Some days he's euphoric and quotes ridiculously high prices; on other days, he's terrified and offers to sell his shares for pennies on the dollar. The stock exchange is the stage where Mr. Market performs. A savvy value investor uses the exchange's liquidity to politely ignore his euphoric offers and happily take advantage of his pessimistic ones, buying great businesses at a discount.
===== Beyond the Giants: Other U.S. Markets =====
While the NYSE and Nasdaq get all the headlines, it's worth knowing about other venues where stocks are traded.
  - **NYSE American**: Formerly the [[American Stock Exchange (AMEX)]], this exchange is also owned by the NYSE's parent company but focuses on smaller, growing companies that don't yet meet the stricter listing requirements of the main NYSE.
  - **Over-the-Counter (OTC) Markets**: This is not a formal exchange but a network for trading stocks that aren't listed on major exchanges. The [[OTC Markets Group]] categorizes these companies into different tiers based on the quality of information they provide. Trading in [[over-the-counter (OTC)]] stocks is generally considered much riskier due to lower reporting standards and less liquidity. //Caveat emptor//—let the buyer beware.