ShmoopTube

00:00

finance a la shmoop what is the primary market all right well a primary market

00:08

is a market where baby stock issues go to be bought for the first time debt [Baby with stocks for heads on conveyor belt]

00:14

equity and other securities start trading on the primary market usually

00:19

courtesy of your kindly loving IPO like primary it's the first time they're

00:24

offered in that process for a brief moment in time the underwriter [Case of cash appears]

00:27

sponsoring the primary market offering of those securities actually owns them

00:33

they then mark them up a few percent and turn around and sell them to the public

00:36

much like that storks brief light from the fluffy clouds in the sky to that you [Stork flying with stock]

00:42

know front doorstep the magic act that created a legal and Farish primary

00:47

market was the 1933 Securities Act which essentially regulated the process for [Securities Act appears on table]

00:52

how companies and banks offer new shares to an unwitting baby innocent public

00:57

after that offering those securities then trade on what is called the

01:01

secondary market clever naming their regulated by the also cleverly named

01:06

Securities Act of 1934 all of this was done to protect investors who were [Men wrestling]

01:11

wrestling greed and fear and ignorance and yes this IPO essence really crapped

01:17

out

Full Transcript