What are Stocks?

What are stocks? Stocks are a transferable evidence of ownership of a corporation. The individuals holding stock in a corporation actually own a portion of that corporation.

These investors in the corporation, stock holders as they are called, share in the ups and downs of the corporation through dividends (depending on the stock) and stock price variance.

All corporations have stock.

Privately Held Corporations may only have a few stock holders, typically a few owners and perhaps a few investors. These companies are funded through private equity. Transferability in Privately Held Corporations is sometimes difficult.

This is not the area that we are focusing on Stock-Market-for-Beginners.org. Unless you are on the inside of this type of an organization, trading these stocks is risky business.

Publicly Held Corporations on the other hand have sufficient outstanding shares to make transferablity easy. There is a high amount of liquidity when dealing with stock of publicly held corporations.

The degree of liquidity, as indicated by the daily volume of stock transactions, is an extremely important part of trading for profit in the market.

Learn how daily volume impacts your trading decisions.

Stock Certificates are issued to each stock holder for their portion of ownership in a corporation. You may have seen stock certificates (depending on your age). You (or maybe your father) may have had some sent to you for the number of shares owned.

Surely you have seen them on movies...you know the movies that have some unsuspecting individual find a huge stack of old stock certificates of IBM in the basement of a house they inherited from their old cranky grandfather. Of course, the shares are valued at $85,000,000 now!

In the "old" days, before the advent of internet trading, it was common practice for stock holders to request that the stock certificates be sent to them. At that time, people were proud to own those shares and their intentions were to hold on to them for long periods of time.

Today, it is uncommon for stock holders to request their stock certificates. Instead, they are held by their brokers in an electronic version.

With the type of trading you will be taught here on this website, you will not have the time to receive the certificates you request before you have sold the position.

Learn more Stock Market Basics

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