What are Stocks?

Definition of a Stock

Short and simple, a stock is an ownership of a firm or a company. A stock is a potion on the firm's assets and earnings. As you buy more stock, your ownership in the firm grows more and more. It doesn't matter if you call it, equity, shares, securities or stock, it all translates to the same thing.

Owning a stock

Owning a company's Stock actually means that you are one of the many owners (Shareholders) of a company, thus you have some claim (very small) to everything that the company owns. In simple terms you own a tiny piece of furniture, trademark and every contract of the company. Being an owner, you are entitled by law a share of the Company's earnings as well as any voting attached to the stock.

When you buy shares, you are given a stock certificate. Basically, its a nice peace of paper that's proof of your ownership. Well you will never get to see the certificate because your brokerage keeps the records electronically. The certificates are stored electronically so that it is easier to trade shares. In the past, people had to take the certificate physically to the brokerage. Now buying and selling shares with a click of the mouse and a phone call makes everything much easier.

That's all for this now Check out our next episode as we continue to explain how stocks work.
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