How Does the Stock Market Work? | Explained in Under 10 Minutes

A thousand dollars invested in an index fund in 1990 would be worth around thirty thousand dollars today. Without doing anything particularly clever. So how does the stock market actually work — and why does it behave the way it does?Emma starts from first principles: what a share actually is, why companies sell pieces of themselves to the public, and how the Amsterdam Stock Exchange of 1602 — the world's first — was funding spice voyages to Asia within months of opening. Neev brings in the behavioural economics: Daniel Kahneman's Nobel Prize-winning work showing that the pain of losing a hundred dollars is twice as powerful as the pleasure of gaining the same amount. That asymmetry, she argues, explains most of what markets do.Lewis walks through the crashes — 1987, the dot-com bubble, the 2008 global financial crisis — and what they have in common. And then Emma delivers the finding that most professional investors would rather you didn't know: after fees, the majority of actively managed funds underperform a simple index over ten years. The data on this is remarkably consistent.If you enjoyed this episode, please subscribe — and send your topic suggestions to [email protected]. We read every one.