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[00:00.15] For our last business podcast, we talked about the big PLCs, the companies traded on the stock exchange.

[00:07.06] We're talking about the stock exchange.

[00:11.84] Richard, what is it?

[00:13.16] The stock exchange is also called the stock market and essentially it is a market.

[00:19.27] It's where the big companies, the shares in the big companies are bought and sold.

[00:25.38] Simple as that.

[00:26.44] Now, Richard, I have to confess my image of the stock market comes from films where you often see scenes of people throwing their arms in the air and, you know, lots of pieces of paper.

[00:39.99] It seems very mad. What's happening there?

[00:42.12] Well, that doesn't really happen anymore.

[00:45.04] That system is called an open outcry.

[00:47.69] And basically these are the guys in the exchange buying and selling the shares.

[00:53.54] Only a certain number of people can do this in the old days.

[00:56.19] So the old days, they don't do that anymore? Not so much now.

[01:01.78] It's nearly all electronic trading.

[01:04.43] I know that there's the FTSE 100 and there's things like the Dow Jones.

[01:09.74] What exactly are they?

[01:11.07] Well, the FTSE 100 is basically the 100 biggest shares in the UK.

[01:18.24] 100 biggest companies?

[01:19.84] 100 biggest companies, yes.

[01:21.43] It's a number to represent the total value of those 100 companies.

[01:26.74] And of course, as individual shares go up and down, what happens to the FTSE 100 gives a general indication of all of them, what's going on.

[01:35.77] So that's why it's called an index, because it's an indication. Exactly.

[01:40.02] And that's the same for the Dow Jones?

[01:42.15] The Dow Jones is the top 30 companies in America.

[01:46.40] And in Germany, you have the DAX, which again is the top 30 companies in Germany.

[01:51.44] So all of these are indications of how the stock market is going in those countries?

[01:57.55] Exactly. So there's the bear and the bull, isn't there?

[02:02.07] Stocks and shares generally rise and we call that a bull market.

[02:08.71] And then, or if they're generally falling, we call that a bear market.

[02:11.90] It always seems to me, Richard, that the stock market is a kind of a very elite buying market.

[02:20.66] Can anybody buy shares? Well, yes.

[02:23.58] Actually, because most stock market trading is done online now, anybody can open up an online account and buy shares through the internet.

[02:33.15] It's very simple and it doesn't cost that much anymore.

[02:36.07] But interestingly, actually, I think most people will already have shares.

[02:41.38] Really? Well, because a lot of people have pensions, especially company pensions, and the pension companies themselves invest their money in the stock exchange.

[02:51.48] So anyone with a pension already will probably have a significant portion of that pension invested in the stock market.

[02:59.18] Already? Yes.

[03:00.51] I do know if you buy, if you spend too much money on buying shares and things, it can all go horribly wrong and you can lose your investment in your house, etc, etc.

[03:11.40] How risky is it?

[03:13.26] Well, yes, of course, if you buy shares in just one company, that company goes bust, you've lost everything.

[03:19.37] So what a lot of people do is buy a fund.

[03:22.02] OK, what does that mean? Well, a fund is a collection of companies.

[03:26.27] So if any one of them does really badly, you don't lose all your money.

[03:29.72] But of course, if one of them does really well, then you do pretty well.

[03:32.91] So buy a fund. Your investment is spread then?

[03:37.43] The key is to spread the risk.

[03:40.62] Don't put all your eggs in one basket.

[03:42.21] Otherwise, you'll have egg on your face.