What Are Stocks?

Updated on March 13, 2019

If you’ve recently watched television, tuned into the news, or seen movies like Wolf of Wall Street and The Big Short, you’ve probably heard of the term “stocks”. But what are they & what does it mean to own them?

Stocks In a Nutshell

Stocks are one of the many securities traded in the stock market. Securities include investments like stocks, options, and bonds. When you buy a security in the form of a stock, you gain the rights to a small piece of the company’s assets and profits. In fact, by law, you are a part owner of the company after you buy a share!

Owning a stock also gives you the right to vote in shareholder meetings, receive portions of a company’s profits in the form of dividends, and to sell your shares to another investor whenever you please.

But What Do Companies Get Out of This?

Companies sell their shares in return for money that can be invested into the operations of their business. With this investment, they hope to grow the company and make more money! Selling shares of the company can be very lucrative, as a single company can raise billions of dollars by doing so!

Takeaway

Ultimately, what must be remembered about stocks are that they provide you an avenue to make money through investing in companies all over the world.