ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Stock Investment - Basics

Updated on January 5, 2011

Stock Investment

(Disclaimer: This article does NOT give any insights about the trading market, or any complicated financial terms or jargons like Bulls and Bears,brokers, traders etc. You can refer to the relevant places for stock market information of various stock exchanges. The article is a very basic tutorial or introduction to people who simply find it difficult to understand the whole stock trading process, because of the overloaded or complex information available over the internet and books.)

After having worked for half a decade in one of the US’s leading stock exchanges, I have got some ditsy idea about what exactly do these financial jargons like shares, stocks, listed exchange, etc mean. I am not a money person, nor did I ever think of investing anything anywhere, so my life has remained almost simple and free of troubles. Even at the stock exchange, my work was basically on the technical side of the whole process. Still, it is impossible for a person to remain completely dry, when being immersed in an ocean. My IQ level never allowed me to completely understand the way stocks and stock exchanges work, till I actually went there and saw how things like stock market trading, stock investing and market exchange, etc are carried on. The financial encyclopedias were more like some conspiring puzzles to me, and to understand the terms written in them, I had to open various other lexicons and references.

I feel that investment in stocks is more like dating. The more risks you take, the better returns you get. At the same time, the chances of losing your money are also directly proportional to your dare to take risks.

Stocks - In Layman Terms

Does it sound exciting to you, to just be an owner to a successful business and have a good finance in hand, without worrying about going to work on a day-to-day basis? How would it feel, if you can just relax, acknowledge the progress of your company and let the money come in, while you accumulate the dividend checks? This thing may look like a fantasy dream to you, but it can become a reality in a much more approachable way, than you might think. As, you might have probably got the idea, here we are talking about owning stocks. This amazing instrument in financial domain is undoubtedly, one of the best tools ever manifested to generate wealth. Stocks are a part, if not the whole foundation of almost all the investment profiles. You can attain your financial freedom, by getting an insight to the world of stocks and knowing the ways in which the stock trading is operated on the stock market. Since past few decades, the interest and knowledge of an average person has grown many folds in the stock market. The thing which was considered to be a plaything for the rich has now become a common man’s hen that lays golden eggs. The possibility of generating wealth, along with the advancements done in the trading strategies and methodologies, has opened up many potential venues. This has enabled everybody to access, and own the stocks.

Stocks, despite being so popular and well known to the masses, haven’t been understood entirely by majority of people. An average individual learns much of the information about stocks, by communicating amongst the members of his peer group, who also don’t have much idea about what they are discussing. Even you might have some time, come across the sentences like “Rob’s cousin made a killing in XYZ company, and now he has got another hot tip”… or “Take care with stocks—you may lose your socks in a matter of days!”. All this misinformation has basically being spread out because of the get-rich-quick mindset that was particularly predominant during the great dotcom era, in late 90s. It made people think that stocks were their grand genie to manifest instantaneous wealth without any potential risk. The resulting crash of the whole dotcom business made it clear that, this is not true at all. Stocks have this ability to create enormous amount of money, but they also have their own risks. The only way to solve this is, by educating people in a better and more organized way.

The main idea behind trading safe in the stock market is to understand where you are investing your money. And, this was my motivation in creating this tutorial, i.e. to facilitate you in making intelligent and better investment decisions yourself.

Let me begin by first describing what a stock is, and then the classifications of stocks. This will be followed by a discussion on how they are traded, what are the reasons behind the change in stock prices, how to go ahead in purchasing stocks and so forth.

What exactly are Stocks?

The Definition of Stocks

A Stock can be simply defined as a share in the act of having and controlling a company. Stocks symbolize a title or claim on the company’s revenues and capital. As you attain greater amount of stocks, you increase your ownership stake in the company. Irrespective of what name you give - be it shares, stocks or equities, they all mean the same.

Owning the Stocks

Becoming an Owner bearing a company’s stocks means that you become a part of the many shareholders or owners of a company and hence, you have a claim (even though quite miniscule) to everything owned by the company. Yes, this means that fundamentally you are the owner of a tiny part of every thing the company owns, right from its trademark, to the contracts, building and furniture, etc. Being an owner, you are eligible to have your share of the company’s revenues as well as any voting privileges bonded to the stock. When you own a stock, you will be given a stock certificate as its representation. It is a paper document which has all the necessary details about your stock and represents the proof of your ownership. Now, with the advancement of technologies and usage of computers, you wouldn’t exactly see this certificate as a paper document, because your brokerage stores these records electronically, which is also called holding shares “in street name.” This facilitates the ease in online stock trading and investing. Conventionally, when a person wanted to trade his or her shares, that person had to carry the certificates physically, down to the brokerage. Now, the same trading can be done with just a mouse click or on a phone call, thereby facilitating the job to everyone’s convenience.

Once you become a shareholder of a public company, it doesn’t mean that you have to deal with the ever-day transactions of the business. In fact, your say in the company is actually limited to one vote per share, in order to elect the board of directors at the Annual Meetings. For example, if you are a shareholder of Microsoft, it doesn’t mean that you can give a call to Bill Gates and let him know about your strategies and ideas in running the company. In similar way, if you own shares of Anheuser Busch, it doesn’t mean that you can go into the factory and take a free case of Bud Light!

The management of the company is responsible to raise the value of the firm for shareholders. If this doesn’t take place, the shareholders have the power to vote and get the management removed, at least theoretically. As a matter of fact, an average individual investor doesn’t possess enough shares to make any material impact on the company. The big boys like large institutional investors and billionaire entrepreneurs are the ones who really make these decisions.

Check the needs, demands and risks involved with stock trading, here.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)