The short and sweet answer is, a way to own part of a company that you do not manage or even work for. Therefore gaining the ability to earn from a company’s success. Companies are either privately held or publicly held. When you hear of a company “going public” they are preparing to launch an IPO (Initial Public Offering).

Simply put, the soon to be public company is to allow the general public to invest in your company and therefore own part of your company. So, when purchasing what is refered to as a “share” of a company you are doing just that, buying your share (a certain percentage) of a company.

What is a Stock?
A stock is your little piece of the larger company that you own and control. Granted, if you own stock in a company, you most likely own a small percentage of the company. As an owner of the company, though, you are entitled to your piece of profits that the company earns along with voting rights attahed to the stock.

The physical representation of owning a stock it the stock certificate. Then is an official document (piece of paper) that is proof of your ownership. With the invention and popularity of online stock trading, you may never actually see a physical stock certificate. The brokerage in which you belong to keeps the records of your ownership electronically.

This process of having electronic “holdings” makes the trading of stocks as easy as a mouse click. You used to have to actually sell and hand over the physical stock certificate to the brokerage or person you were selling it to.

Tags: electronic holdings, initial public offering, ipo initial public offering, physical stock, sweet answer