What is stock?

Cheat Sheet:

    • Stock is ownership in a company.
    • Stock is sold in units called shares.
    • A person who owns stock is called a stockholder or shareholder.

When you own stock, you own a small piece of a company. Stock comes in units that are called shares. A person who owns shares of stock is called a stockholder or a shareholder. Companies are typically divided into millions, tens of millions, or even billions of shares. For example, Facebook (FB) is divided up into 2.35 billion shares.

If you want to figure out how much of a company you own, divide the number of shares you own by the total number of shares.  If you owned 23.5 million shares, you’d own 1% of Facebook. Mark Zuckerberg owns 471 million shares, which is about 20% of the company. Not too shabby.

In the old days, stock came in beautiful paper certificates like this:

disney

Companies have been phasing out physical certificates because they’re a pain to deal with. They can get lost or damaged, and you have to mail in the certificate if you want to sell your stock.  Most brokerages won’t even handle them anymore, or they’ll charge a lot to do it.  So nowadays, it’s pretty much all electronic.

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