TheStockTalk.net

To start off, a stock is technically an actual piece of a company. When you are buying a stock you are buying stake in a company and legally own a % of the company based on the % of the company’s outstanding shares you own.

So if you owned 500 shares of a stock that had 4,000,000 shares outstanding, you would own 0.01% of that company. If you owned 250,000 shares of that same company you would own 6.25% of the company.

There are 2 kinds of stocks: preferred and common. The kind available for most investors to buy is common. Common stock carries the ability for the shareholder to vote in the company’s meetings while preferred does not. The “advantage” of preferred stock is that owners of preferred stock receive dividends before common owners and in the event that the company goes bankrupt or liquidates everything, preferred stockholders receive what is left of the company before common shareholders.

Not every company offers stock. When a company does offer stock, the company is referred to as a “public” company while a company that does not sell stock is known as “private.” Companies sell stock to the public in order to raise money for company operations. When the company goes public, it has an initial public offering (IPO) where it sells a certain number of shares at a certain price. IPO’s are usually only available to professional funds to purchase. This is unfortunate as a lot of money can be made at getting a stock of a company that has just gone public.

I hope this has helped anyone that is just starting to look into investing. Until next time, happy investing!