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What is a Stock?

What is a stock?  Sounds pretty basic.  Come on…stocks, bonds, Wall Street.  Sometimes though, I think folks don’t realize they really become an owner of a company when they buy a share of stock.

We’ll cut out the Wall Street lingo and ignore the legal and regulatory side of stock ownership.  We’ll just focus on the concept.

Remember when you were a kid and dad said, “Take stock of that sonny boy”.  He didn’t say “take loan of that”.  He wanted you to take ownership of something…a project, a class, or even mowing the yard.  The message was…own it.

Or imagine…you and your 4 buddies find that old F-150 pickup you’ve been looking for…selling for a thousand dollars.  You each cough up $200 bucks.  You’ve got a share of that truck.  You own part it.  

You’ll be a part of the good times and bad the truck brings.  You’ll be involved in decisions about the truck.  You could probably even sell your share to a buddy if you want out.  Because you’re an owner.

Of course, that’s oversimplifying the process of buying a share of a publicly traded company.  The point is, you are a part owner of a company when you buy its shares.  Even if you only own one share.

As a part owner, you’re participating and potentially profiting in that company’s business.  When the company succeeds, you’ll benefit from the stock price going higher.  And in tough times, when it goes lower too.  You’ll profit when any dividends are paid.  As a share holder you’ll have the opportunity to vote on company matters.  You are an owner.  

Something to think about…do the companies you own, or the mutual funds you own, invest in companies that are in conflict with your values and beliefs.  That’s another video…socially responsible investing…and more specifically, Biblically Responsible Investing.