It all started on May 17, 1792, when twenty four stockbrokers on Wall Street, New York, signed an agreement known as the “Buttonwood Agreement” or the “Buttonwood Tree Agreement” under a buttonwood tree, and began trading stocks.
Twenty five years later, on March 8, 1817, these founders decided to make their trading process more transparent and organized and expand their market operations. Today, that historic agreement has turned into one of the biggest investment opportunities in the United States and the world. By understanding its mechanisms, one can discover the best U.S. stocks for investment in financial markets, especially in the Forex market.
Introduction to the US Stock Market
The U.S. stock market, particularly the New York Stock Exchange (NYSE) and the Nasdaq (NASDAQ), are among the largest and most dynamic financial markets in the world, providing numerous investment opportunities for Americans and nearly everyone around the globe. These exchanges are unmatched in terms of trading volume, stock diversity, and liquidity. In this market, thousands of companies from various industries are traded, ranging from technology firms to energy and consumer goods companies, and many more.
How the US Stock Market Works
The U.S. stock exchanges are publicly accessible to all investors, and trading in these markets is overseen by government organizations such as the U.S. Securities and Exchange Commission (SEC). This market uses a supply and demand system to determine stock prices and allows traders and investors to buy or sell their stocks at any time.
Differences Between the US Stock Market and Other Markets
The key differences between the U.S. stock market and others, such as the London or Tokyo stock exchanges, are the levels of transparency, liquidity, and the ability to access information online. Additionally, the U.S. stock market, due to the high diversity of industries and companies, provides investors with more investment opportunities.
Furthermore, the New York Stock Exchange and the Nasdaq have differences between them. For example, the Nasdaq sees more trades per day, but the market value of the NYSE is much higher. In the Nasdaq, all trades are electronic, while the NYSE has a physical building for floor trading. The NYSE is an “Action Market,” while the Nasdaq is a “Dealer Market.”
Introduction to Key Symbols in the US Stock Market
Famous symbols in the U.S. stock market include companies such as Apple (AAPL), Microsoft (MSFT), Tesla (TSLA), Amazon (AMZN), and Google (GOOGL). These companies are always considered among the best for investment due to their financial stability, high growth, and continuous innovations in various industries.
Best US Stocks for Investment
In this section, we will name and explain the best US stocks for investment:
Apple (AAPL)
Apple is undoubtedly one of the strongest global brands, always maintaining high popularity in every new market it enters. As the company is constantly innovating, its new products such as the iPhone, iPad, and MacBooks continue to be on consumers’ shopping lists worldwide. Additionally, Apple has sought to reduce its reliance on hardware sales by growing its services sector, including the App Store, Apple Music, and Apple TV, aiming for a more sustainable revenue model. With continuous revenue growth, high profit margins, and strong performance in the stock market, Apple has become one of the best options for long term investment.
Tesla (TSLA)
Tesla, as a pioneer in the electric vehicle industry, has captured a significant share of the electric vehicle market. With the global increase in demand for electric cars, Tesla has positioned itself as one of the strongest players in this industry. Furthermore, innovations in areas such as self driving technology and battery improvements allow Tesla to expand its global presence even more in the near future. Although this stock is highly volatile, its long term growth potential makes it an attractive option for high risk investors.
Berkshire Hathaway (BRK.A)
Berkshire Hathaway, led by one of the most famous investors in the world, Warren Buffett, is a large conglomerate focused on offering services such as insurance, stock exchanges, wealth management, investment, asset management, joint ventures, and management of those investments. In 2019, Berkshire Hathaway ranked as the eighth largest company in the world. Its headquarters are located in Omaha, Nebraska, and a portion of its stock is traded on the New York Stock Exchange.
Amazon (AMZN)
Amazon, as one of the largest and most popular e-commerce platforms, continues to grow. With the rise of online sales globally, Amazon has capitalized on this trend. In addition to e-commerce, the company is active in other sectors, including cloud services (AWS), which is currently one of Amazon’s largest and most profitable segments. By using innovative strategies and making extensive investments in areas such as logistics and artificial intelligence, Amazon has charted a bright future. These characteristics make Amazon one of the best options for investing in the U.S. stock market.
Microsoft (MSFT)
Microsoft, the largest software giant in the world, continues to maintain its dominance in the global market. The company has experienced steady growth and high profitability by offering highly popular software products like Windows, the Office suite, and more. Additionally, Microsoft has diversified by entering new markets such as the video game industry, which has enabled it to further expand its funding and profitability. As a result, Microsoft remains a reliable and consistent option for investors.
Eli Lilly And Co (LLY)
Eli Lilly And Co is one of the most renowned pharmaceutical companies in the United States, with its stocks traded on the New York Stock Exchange. Founded by Colonel Eli Lilly, an American chemist and pharmacist, the company was the first mass producer of drugs such as penicillin, the polio vaccine, and insulin. It was also one of the first companies to produce human insulin, and today, it is the largest producer and distributor of medical pharmaceuticals in the world.
How Professionals Buy Stocks
Professionals pay attention to two main factors when selecting stocks: fundamental analysis and technical analysis. They evaluate financial reports, growth rates, past performance, and future prospects of companies. Additionally, they use tools such as indicators and indices to identify the best entry and exit points.
How Forex Professionals Invest in US Stocks
Forex professionals use similar strategies for investing in US stocks. However, they typically leverage and apply risk management techniques to increase the efficiency of their trades. Many of them also use economic news and political changes to predict market movements.
Advantages and Disadvantages of Investing in US Stocks
Advantages:
High Liquidity
One of the main advantages of investing in US stocks is the very high liquidity in this market. Due to the large volume of transactions and the numerous buyers and sellers, it is very easy to buy and sell stocks at any time. This high liquidity ensures that the market is continuously accessible, allowing investors to execute their decisions in real time without facing many limitations.
Diversity and High Selection
The US stock market, with its wide range of industries and companies, provides many opportunities to choose different stocks for investment. From technology industries to energy, consumer goods, and healthcare, the diversity in this market allows investors to build a diversified portfolio based on their risk tolerance and different strategies. This high level of diversity helps reduce risks associated with concentrating on a single industry.
High Transparency and Regulation
The US stock market is under strict oversight by government organizations such as the Securities and Exchange Commission (SEC). This oversight and high transparency ensure that financial information from companies is published accurately and timely, allowing investors to make more confident decisions about the market. The precise regulations and reporting standards for companies enable investors to easily access reliable information and better manage potential risks.
Disadvantages:
Political and Economic Risks
One of the disadvantages of investing in US stocks is the political and economic risks, which can quickly affect the market. Changes in domestic policies in the US, such as tax reforms or new regulations, may cause price volatility. Additionally, global economic factors can also impact the US stock market, posing risks for investors.
Intense Competition
The US stock market is one of the most competitive markets globally. Many professional investors and large companies operate in this market, which increases the competition for identifying and purchasing profitable stocks. This intense competition can be challenging, as precise analysis and stock selection require deep knowledge and experience.
Investment Limitations in US Stocks
Investing in US stocks comes with risks and limitations:
Political and Economic Risks
Although the US stock market offers many investment opportunities, changes in domestic policies and economic conditions in the US can affect market performance. For example, changes in tax policies, trade policies, or internal economic crises can negatively impact the growth rate and profitability of companies, thus increasing investment risks.
Market Volatility
Another limitation of investing in US stocks is the high market volatility. Due to the high volume of transactions and substantial liquidity, prices can experience significant fluctuations. These fluctuations can be challenging for both short term and long term investors, as predicting market movements in volatile conditions can be difficult.
Transaction Costs
The costs associated with buying and selling stocks in the US stock market can become a problem for some investors, especially those who trade in smaller volumes. These costs include transaction fees, stock transfer fees, and other related costs. Such costs can reduce a portion of the profits gained from investments.
Unpredictable Market
The US stock market, due to various economic, political, and global influences, is sometimes unpredictable. Sudden market changes, such as economic crises or unexpected news, can quickly alter price trends. This can be challenging for investors who rely on market predictions, requiring flexibility and preparedness to handle risks.