What are Stocks?



Stocks are  pieces of business own by the shareholders. To understand it, let us take SMPH as an example.
SMPH or SM Prime Holdings is the company that own and operates the SM Malls in the Philippines and China.  This company is divided into 13,898,943,067 outstanding shares or stocks. Owning one of these stocks will make you a part owner of those malls...so does it mean I can go to any SM mall and do a shopping spree for free? Or can I demand from the sales lady to prioritize my purchases during the midnight sale since I'm a part owner of SMPH?  No, you can't do that unless you want to be mistaken as insane...

So what if I own a stock(s)?


First, owning a stock entitles you to be a business owner but not necessarily the controlling owner (Management) unless you own majority of the stocks. The following are your rights as a stockholder:
1. Voting Rights
2. Dividend of Net Income
3. To Sell the Stocks you Own at Your Price
4. The Right to Avail of Stock Rights/Warrants and offerings.

The abovementioned are the basic and important rights of a stockholder.For small investors like me, I think the most important is number 2 and specially number 3. I say it again..."The Privilege to Sell the Stocks you Own at Your Dictated Price". Likewise, for those who want to purchase stocks, they also have the option to buy the price at the price they want. Of course, if someone agreed to your Price, whether Buy or Sell, then we have a Matched and only then the transaction will be finalized.

Note that whenever I mention stocks, I am referring to common stocks only. I will not be touching about the preferred stocks since I'm not investing on it and I think it is not useful for individual investor (usually companies or institutional investor holds the preferred shares). 



Related Posts Plugin for WordPress, Blogger...