What are Stocks?

What are stocks? The sad truth is fewer and fewer people understand what stocks are. Stocks are shares of companies. The best way to explain what stocks are is to come up with a makeup situation. So lets pretend that George is a business owner and he produces phones. George makes good phones and they are selling and he is doing well. But lets say that he wants to expand is phone company. One way is to take out loans but this might not cover anything. The other option is to sell shares of his companies in the form of stocks. This gets to the definition of stocks. Stocks are small portions of the company. You are like a miniature owner of the company when you a stock. It would take a lot of money and a lot of shares of the stock to become a majority owner. A lot of the stocks are owned by the original people who started the company. This gives those business owners the ability to control their company still. This also means that you own a little bit of the risk of owning a company. If that company were to go down you would lose all of the money. Now stocks are special because you are able to trade them. You can 'sell' your share to someone and then they become the owner of that small portion of the company. There are a lot more to stocks and this will be covered in due time. If you want to learn about something specific don't be afraid to let us know by leaving a comment.