Basics
Basic4 Min Read
What Is a Stock?
Owning a small piece of a company — and who actually sets the price of that piece.
When you buy a share of Apple, you are not buying a piece of paper. You are buying one of the billions of pieces the company's ownership has been divided into. That piece gives you two things: a claim on your share of any profits the company pays out, and a vote at the shareholder meeting.
Who Sets the Price
Nobody. More precisely: the last number a buyer and a seller agreed on. There is no signboard showing the company's "true value"; the price is the point where thousands of simultaneous decisions intersect.
That is why the price is driven by two things at once:
- The company itself — how much it earns, how fast it grows, how much it owes.
- The market's mood — interest rates, fear, which sector is in fashion, money flowing in.
In the short run the second is stronger than the first. In the long run it flips. One of the oldest lines about the market says exactly this:
In the short run the market is a voting machine; in the long run it is a weighing machine.
What It Pays You
There are two ways a stock makes you money, and they should not be confused:
| Path | How it happens | Who it suits |
|---|---|---|
| Capital gains | You sell for more than you paid | Investors betting on growth |
| Dividends | The company pays out profits in cash | Investors who want income |
The sum of the two is called total return. More: What Is a Dividend?
What You Own — and What You Don't
You are: the owner of a small percentage of the company's assets and future profits.
You are not: liable for the company's debts. If a company goes bankrupt, a shareholder loses at most what they put in — nothing more is asked. This is called limited liability, and it is the modern corporation's most important invention.
Percentage, Not Share Count
The most common beginner mistake: thinking in terms of "should I buy 100 shares or 10?" What matters is not how many shares you buy but what percentage of your money you put into that company.
Buying 10 shares of a $50 stock and 1 share of a $500 stock are the same thing: either way you have a $500 position. A price looking "cheap" or "expensive" is a fact about the share count, not about the company's value. More: What Is Market Cap?
Where You'll See It on This Site
Every company has its own page — like NVDA. Price, day range, market cap, key ratios, past earnings and company news all live there together. The company directory is at Companies, and the search box at the top finds any symbol.