Why do we have the stock market? We all know that it is considered to be a great place to invest money, but why was it made and why would a business sell it's shares? The reason for the stock market is that it makes sense.

Let us take an example here, say Joe opened up a flower shop which cost him $200,000. The shop starts to make some good money so he decides that he wants to open up another shop so that he can expand.

But there is a problem. Joe does not have enough money to open up another store. What can he do about it? Well one thing he can do is to sell shares of his business in order to get things off the ground. For example, if Joe's business is making $100,000 a year and a 10% return sounds like a good investment he can consider his store to be worth $1,000,000.

If he breaks these up into little pieces and sell then to individual investors he can get the $200,000 it cost to open up a new store simply by selling 20% of the ownership of the company. And as long as Joe keeps over 50% of the ownership of the store he still controls the company.

The idea here is that the store will grow so that this really becomes a win-win situation. Investors benefit as the store grows and as demand for the "stock" in the store grows with it. Business owners benefit because they have more money to invest into their company. This idea of selling shares in the company to raise capital dates back to the 1600s and will likely keep going on until the future for one simple reason. It works.

And as an investor you can buy shares in different companies and do research on the different companies so that you can set all the odds in your favor.

For more on the stock market history visit this history facts of the stock market page.. This article, Why Do We Have The Stock Market? is available for free reprint.