As a shareholder you will have a claim to a portion of the company’s earnings, paid in dividends, and any voting rights attached to the share. It is standard practice to have one vote per common share to be used when electing the Board of Directors. It is the Board’s responsibility to increase the value of the company (your share) for you so it is only right that you get a say in who gets appointed.

Just because you are a partial owner it does not mean that you will be in any way responsible for the running of the company, nor does it afford you a discount on any of their products or services!

It used to be the case that shareholders were presented with a certificate to prove their ownership. If you had wanted to sell your shares you

Apart from the glitz and panache of Hollywood or the iconic World of the pop star the stock market is probably seen as the most glamorous way of making a living (and a very healthy living at that!). Over recent times advances in technology have made the Stock Market far more accessible to the general public. This has made the possibility of becoming rich from stocks far more realistic than obtaining a record deal or a landing a role in a Hollywood production.

Unfortunately involvement in the Stock Market is not a one-way street. It is commonly acknowledged that losing a fortune in Stocks is much easier than gaining one. You will constantly see figures touted for the percentage of people who lose money trading or investing. They range from 90% to as much as 99% depending on which ‘market guru’ is selling you their foolproof guide to making money.

The true pros, however, will tell you the key to being a successful Stock speculator is being able to make decisions for yourself based on your own set of rules. Just like a baby learns to crawl before learning to walk and run, you must begin by learning the stock market basics.

Ignoring the Hearsay

The chances are that all you hear concerning the Stock Market comes from either a work colleague or the ten-second report delivered on your evening news. This news report is as interesting as it is useful, not at all. On the other hand what you hear at work should be ignored for other reasons. If you are a complete stock novice, no offense intended, this hearsay might sound very interesting and possibly even tempting. The typical conversation will go something like this:

Colleague: “Did you hear about Mike from payrolls?”

You: “No, what about him?”

Colleague: “He made a few grand from Stock ‘WXYZ’ last month.”

You: “Wow, I could really do with that money right now.”

Colleague: “Me too. He says he has a few more hot tips for us if we are interested.”

Well done to Mike, but the chances are the next conversation you have with this colleague will go something like this:

Colleague: “Have you seen Mike from payrolls?”

You: “No, why?”

Colleague: “I lost my shirt on that ‘hot tip’ he gave me. I want to give him a piece of my mind.”

Although this conversation is complete fiction it is not at all unrealistic. It serves as a classic example as to why you should learn to make you own investment decisions, and pay no attention to what your friend at work or drinking buddies down at the pub think.

Shares, Stock and Equity

When the media, your broker or your mates talk about The Market you will hear them use the terms Stock, Share and Equity. Slightly confusing, you might think, but the reality is they all mean the same thing. Examples of how the terms are used can be seen below:

Stock – “I’m a big time player in the Stock Market.”

Share (s) – “Sara just bought 2 000 shares in company ‘XYZ’.”

Equity – “Now over to our financial correspondent and a look at today’s Equity Market.”

All of these terms mean the same thing, partial ownership of a company, and all three are interchangeable in any of the above examples. The more Shares you acquire the greater your stake in the company becomes.

As a shareholder you will have a claim to a portion of the company’s earnings, paid in dividends, and any voting rights attached to the share. It is standard practice to have one vote per common share to be used when electing the Board of Directors. It is the Board’s responsibility to increase the value of the company (your share) for you so it is only right that you get a say in who gets appointed.

Just because you are a partial owner it does not mean that you will be in any way responsible for the running of the company, nor does it afford you a discount on any of their products or services!

It used to be the case that shareholders were presented with a certificate to prove their ownership. If you had wanted to sell your shares you

The true pros, however, will tell you the key to being a successful Stock speculator is being able to make decisions for yourself based on your own set of rules. Just like a baby learns to crawl before learning to walk and run, you must begin by learning the stock market basics.

Ignoring the Hearsay

The chances are that all you hear concerning the Stock Market comes from either a work colleague or the ten-second report delivered on your evening news. This news report is as interesting as it is useful, not at all. On the other hand what you hear at work should be ignored for other reasons. If you are a complete stock novice, no offense intended, this hearsay might sound very interesting and possibly even tempting. The typical conversation will go something like this:

Colleague: “Did you hear about Mike from payrolls?”

You: “No, what about him?”

Colleague: “He made a few grand from Stock ‘WXYZ’ last month.”

You: “Wow, I could really do with that money right now.”

Colleague: “Me too. He says he has a few more hot tips for us if we are interested.”

Well done to Mike, but the chances are the next conversation you have with this colleague will go something like this:

Colleague: “Have you seen Mike from payrolls?”

You: “No, why?”

Colleague: “I lost my shirt on that ‘hot tip’ he gave me. I want to give him a piece of my mind.”

Although this conversation is complete fiction it is not at all unrealistic. It serves as a classic example as to why you should learn to make you own investment decisions, and pay no attention to what your friend at work or drinking buddies down at the pub think.

Shares, Stock and Equity

When the media, your broker or your mates talk about The Market you will hear them use the terms Stock, Share and Equity. Slightly confusing, you might think, but the reality is they all mean the same thing. Examples of how the terms are used can be seen below:

Stock – “I’m a big time player in the Stock Market.”

Share (s) – “Sara just bought 2 000 shares in company ‘XYZ’.”

Equity – “Now over to our financial correspondent and a look at today’s Equity Market.”

All of these terms mean the same thing, partial ownership of a company, and all three are interchangeable in any of the above examples. The more Shares you acquire the greater your stake in the company becomes.

As a shareholder you will have a claim to a portion of the company’s earnings, paid in dividends, and any voting rights attached to the share. It is standard practice to have one vote per common share to be used when electing the Board of Directors. It is the Board’s responsibility to increase the value of the company (your share) for you so it is only right that you get a say in who gets appointed.

Just because you are a partial owner it does not mean that you will be in any way responsible for the running of the company, nor does it afford you a discount on any of their products or services!

It used to be the case that shareholders were presented with a certificate to prove their ownership. If you had wanted to sell your shares you

Colleague: “Did you hear about Mike from payrolls?”

You: “No, what about him?”

Colleague: “He made a few grand from Stock ‘WXYZ’ last month.”

You: “Wow, I could really do with that money right now.”

Colleague: “Me too. He says he has a few more hot tips for us if we are interested.”

Well done to Mike, but the chances are the next conversation you have with this colleague will go something like this:

Colleague: “Have you seen Mike from payrolls?”

You: “No, why?”

Colleague: “I lost my shirt on that ‘hot tip’ he gave me. I want to give him a piece of my mind.”

Although this conversation is complete fiction it is not at all unrealistic. It serves as a classic example as to why you should learn to make you own investment decisions, and pay no attention to what your friend at work or drinking buddies down at the pub think.

Shares, Stock and Equity

When the media, your broker or your mates talk about The Market you will hear them use the terms Stock, Share and Equity. Slightly confusing, you might think, but the reality is they all mean the same thing. Examples of how the terms are used can be seen below:

Stock – “I’m a big time player in the Stock Market.”

Share (s) – “Sara just bought 2 000 shares in company ‘XYZ’.”

Equity – “Now over to our financial correspondent and a look at today’s Equity Market.”

All of these terms mean the same thing, partial ownership of a company, and all three are interchangeable in any of the above examples. The more Shares you acquire the greater your stake in the company becomes.

As a shareholder you will have a claim to a portion of the company’s earnings, paid in dividends, and any voting rights attached to the share. It is standard practice to have one vote per common share to be used when electing the Board of Directors. It is the Board’s responsibility to increase the value of the company (your share) for you so it is only right that you get a say in who gets appointed.

Just because you are a partial owner it does not mean that you will be in any way responsible for the running of the company, nor does it afford you a discount on any of their products or services!

It used to be the case that shareholders were presented with a certificate to prove their ownership. If you had wanted to sell your shares you

Shares, Stock and Equity

When the media, your broker or your mates talk about The Market you will hear them use the terms Stock, Share and Equity. Slightly confusing, you might think, but the reality is they all mean the same thing. Examples of how the terms are used can be seen below:

Stock – “I’m a big time player in the Stock Market.”

Share (s) – “Sara just bought 2 000 shares in company ‘XYZ’.”

Equity – “Now over to our financial correspondent and a look at today’s Equity Market.”

All of these terms mean the same thing, partial ownership of a company, and all three are interchangeable in any of the above examples. The more Shares you acquire the greater your stake in the company becomes.

As a shareholder you will have a claim to a portion of the company’s earnings, paid in dividends, and any voting rights attached to the share. It is standard practice to have one vote per common share to be used when electing the Board of Directors. It is the Board’s responsibility to increase the value of the company (your share) for you so it is only right that you get a say in who gets appointed.

Just because you are a partial owner it does not mean that you will be in any way responsible for the running of the company, nor does it afford you a discount on any of their products or services!

It used to be the case that shareholders were presented with a certificate to prove their ownership. If you had wanted to sell your shares you

As a shareholder you will have a claim to a portion of the company’s earnings, paid in dividends, and any voting rights attached to the share. It is standard practice to have one vote per common share to be used when electing the Board of Directors. It is the Board’s responsibility to increase the value of the company (your share) for you so it is only right that you get a say in who gets appointed.

Just because you are a partial owner it does not mean that you will be in any way responsible for the running of the company, nor does it afford you a discount on any of their products or services!

It used to be the case that shareholders were presented with a certificate to prove their ownership. If you had wanted to sell your shares you would have had to take the actual certificates the exchange. However, with the birth and evolution of the computer and electronic trading this is no longer necessary. You can now buy and sell your shares with the click of a mouse or a phone call and you are no longer issued with a certificate. To ease the flow of transfer, certificates are now held in electronic form by your broker (in street name). This makes it possible to transfer ownership (buy and sell) in a fraction of a second. In fact day traders do just that, many times every day.

Why Issue Stock?

So why do companies issue stock in the first place? Lets face it; it means they share their ownership and their profits with the general public for the price of a share. The reason is to raise money. By selling off a slice of their business they can raise hundreds of millions of dollars without having to pay any of it back or pay any interest on it. This method of raising funds is knows as equity financing.

The alternative to equity financing is debt financing. This is where a company issues bonds or takes out a bank loan.

What Happens if the Company Goes Bust?

If the company you have invested in goes bust then you are only liable for the amount you have invested in that company, i.e. the number of shares you own multiplied by the initial cost of each share. This does not mean that creditors will come after you for that amount it simply means your shares will be worth nothing. Only once the creditors have sold off the company’s assets to cover its debts the shareholders have a claim on any assets remaining. This is known as absolute priority.

Stocks Vs Bonds

As we know bonds are a form of debt financing. To invest in bonds does have some advantages over buying shares. For example, you will receive a guaranteed interest payment throughout the life of the bond (some companies don’t pay dividends) and you are guaranteed the return of your initial investment known as the principal. We already know that this is not the case as a stock’s price can just as easily fall from the value at which you made your investment. However, with greater risk comes greater reward; traditionally stocks have outperformed bonds on rate of return.

Preferred Stock

So far the shares/ stock we have referred to is known as common stock. As the name suggests this is the most widely traded type of share. However, there is another type of stock, preferred stock. This is a cross between common stocks and bonds. Preferred stockholders are repaid before common stockholders (but still after creditors) if a company goes bankrupt. They often pay a guaranteed dividend for life. Frequently the issuing company has the right to buy back their preferred stock at any time for a premium. One downside of being a preferred stock holder is they usually come with a lack of voting rights. Examples of companies currently issuing preferred stock are:

MBNA – Ticker: KRB-B, KRB-C

TransCanadaPipelines ltd - Ticker: TRPPR

Merrill Lynch – Ticker: MER-B, MER-C

Market Exchanges: Home of Shares

Exchanges are where shares are traded, i.e. where buyers and sellers meet to decide on a price for a share. T