How would you like to own a major corporation? Chances are you already do, at least a piece of one.
That piece of a corporation is a stock, or share. If you have purchased stock in a company, you and the other stockholders in that company are the owners.
But that isn't
what it is like to own stocks. The Bill Gateses of the business world don't drop you -- the owner -- a line to go over the latest sales figures or seek your approval on a new product launch. But collectively, stockholders do own a large piece of publicly traded companies and have a big say in how a company operates.
For investors, the reason for buying stock isn't to own a company, but rather (drum roll, please)
to make money
! In buying a stock, you make an investment bet that the company's stock will increase in value. Therein lies the mystery of stocks: They have no intrinsic value, the stock market assigns them one based on what you and other investors are willing to pay. But over the long haul, stocks on average have been a profitable investment.
Cramer's Rules & Commandments
A stock is a piece of the corporate pie -- a handy and simple definition, but stock investing isn't always simple. For a quick reference, here's Jim Cramer's
Twenty-Five Rules of Investing and
Ten Commandments of Trading and his admonition to
Know What You Own.
Once you get a little seasoning in the market, check out Barry Ritholtz's
Apprenticed Investor series.
And to better understand some of the nuances of stocks, check out these articles from
archives by James Cramer:
Getting Started: Become a Pro at Personal Finance, Part I
Getting Started: Become a Pro at Personal Finance, Part II
Tips on Stock Trading
Kenny Rogers' song, The Gambler, offers a timeless piece of investing advice: Know when to hold 'em, know when to fold 'em.
Gary B. Smith extrapolated on Kenny's sound instruction to give traders aces that they can keep:
The Chartman's Tool Bag
The Chartman's Toolbox, Completed
Gary's Greatest Hits on Trading
And from the archives,
Gary B. Smith's Little Instruction Book.