What Are Stocks?

    Throughout the course of your life, you have probably heard stocks mentioned in all sorts of situations: in the news, on the radio, by your parents, etc. So, what exactly are stocks? Over the past few decades the way they work has come to change greatly. However, in the 21^st century you can come to think of a stock as owning a portion of a company.

            Stocks are counted in shares. One share represents a small portion of the often hundreds of millions of shares of a company. They can be bought and sold through the stock market in large or small amounts. Generally, you want to buy a stock at a low price and sell it at a high price. That way, you earn money!

            Shareholders are the people or companies that own shares of a company. If you own a large percentage of a company’s stock, you can get a seat on the board (or a say in the way the company runs things). If you own over 50% of the stock, you theoretically own the company. When you start out, this may seem difficult to achieve, but by slowly growing your bottom line, this possibility isn't that far away.

            In the United States, there are a plethora of laws on how the stock market must run. For beginners, trading stocks generally requires a stock trading accounts, which are provided by most major banks and investment firms. Trading usually costs anywhere between $4-$12, and the government takes a portion of your earnings as income tax.

            The value of money constantly changes due to inflation; so leaving it in the bank could possibly reduce its value. On the other hand, the stock market provides a method of earning money right from your computer! However, you shouldn't take to investing in stocks lightly because there are many risks. Poor investments could cause you to loose all your money. You can think of the stock market as gambling: sometimes you win, sometimes you loose. However, unlike gambling you can reduce your risks through research and experience.

Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk.