Читать книгу Mutual Funds For Dummies - Eric Tyson - Страница 20

Stocks are the most common ownership investment traded on securities markets. They represent shares of ownership in a company. Companies that sell stock to the general public (called publicly held companies) include aircraft manufacturers, automobile manufacturers, banks, computer software producers, ecommerce companies, food manufacturers, hotels, mining companies, oil and gas firms, publishers, restaurant chains, supermarkets, wholesalers, and many types of other (legal) businesses!

When you hold stock in a company, you share in the company’s profits in the form of annual dividends (although some companies don’t pay dividends) as well as in an increase (you hope) in the stock price if the company grows and makes increasing profits. That’s what happens when all is going well. The downside is that if the company’s business declines, your stock can plummet or even go to $0 per share.

Besides occupying different industries, companies also vary in size. In the financial press, you often hear companies referred to by their market capitalization, which is the total value of their outstanding stock. This is what the stock market and the investors who participate in it think a company is worth.

You can choose from two very different ways to invest in bonds and stocks. You can purchase individual securities, or you can invest in a portfolio of securities through a mutual fund or exchange-traded fund. I discuss stock funds in Chapter 13 and individual securities (and other alternatives to funds) in Part 2.