ELI5: What do people on Wall street actually do?

I feel like people are delving too deep into your question, so I'm going to give a much more high level answer to your question.

At it's core, Wall Street does two things:

1) Match people who have money with people who need money: People with money (investors) give money to companies in need of money to grow their businesses and in return, the investors receive an IOU (debt) or part ownership in the company (stock).

This is important to Society becaus

2) Match people who want to take risk with people who do not want to take risk: Let's say you are a farmer who grows corn. The price of corn today is $1, but you won't be able to harvest your corn now since its still in the ground. You are worried about the price of corn going down in 6 months, at harvest time. On the other hand, you have cereal companies that need corn to make cereal. These companies are worried about the price of corn going up in 6 months, since that would cause the price of their cereal to go up. Wall Street matches these people up, such that they can agree on a price today for the corn that will get harvested and delivered in 6 months. In this case, both parties are happy since the farmer is guaranteed a price to sell their corn (ie. no risk that the price of corn goes down) and the cereal company is happy since they're guaranteed a price to buy their corn (ie. no risk that the price of corn goes up).

/r/explainlikeimfive Thread