A stock is a security that represents ownership in a publicly traded company and is sold by the share. Each of these shares denotes a part ownership for a shareowner or shareholder of that company. Stocks are traded on exchanges all over the world, the largest is the New York Stock Exchange or NYSE. Stocks are identified by their ticker symbol. For example, General Electric is identified as GE. Individual Investors can purchase shares for themselves, at a brokerage of their choice, wherever they have an account set up. There are different types of shares, common and preferred. Most shareholders will purchase common stock. The goal is for the price per share to increase over time so the investor can have a profit that beats monies in Treasury bills or beats inflation. Over time, stocks have outperformed cash and bonds, this takes into account depressions, world wars and other world changing events.
Common Stock
Common stock, also known as ordinary shares and common shares, grant the holder a proportion of the company's dividends and voting rights. Shares that are traded and bought by retail investors are usually shares of common stock. This kind of stock reflects the basic ownership of the company and is subordinate in claims to preferred shares and other dilutive securities. This is because by purchasing a common stock, you are effectively an owner of the company which makes you a servant to other investors who have a claim on the company through debt or derivatives.
Preferred Stock
Preferred stock is special stock sold to particular institutions or individuals that grant the holder priority over common stock holders in terms of dividends and bankruptcy claims. The drawback is that preferred stocks usually have no voting rights. The price of preferred stock in a company will usually differ from the price of common stock, a reflection of its different rights and privileges.
