What is a Stock

Today I’m going to talk about what a stock is.

It seems like a simple enough question as I’ve heard people casually talk about stocks in conversations. And there I am just nodding away like I know what they’re talking about hoping that they don’t actually ask me any questions about the stocks or the stock market.

If I’m being fully transparent, while I was nodding away and hoping I wouldn’t be asked any direct questions about stocks, I was also judging the speaker as they would come across as pretentious. Like “hey everybody, look at how fancy I am as I can talk about stocks and the stock market”. Like common, do you even know what you’re talking about because I don’t? (Can you tell I’m projecting my insecurities here).

But I have digressed. 

And I’m happy to say that my lack of knowledge about stocks led me to start right at the beginning. I needed to understand what a stock was. I googled “what is a stock”, “how to buy a stock”, “how to know when to buy a stock”, “how many stocks do I need to buy at once”. To me, I expected myself to have known these basic questions about stocks but up to this point, I had never learnt about them.

I hope you know that it’s okay to not know something. We can’t know everything. And if you’re willing to dedicate some time into learning, then you can turn that curiosity about a subject into something pretty cool. And if you’re like me, next time you’re in a conversation about stocks, you can bravely ask questions instead of judging them.

How the Internet Defines What a Stock Is

I typed “what is a stock” into Google. Then I read the definition - “is an investment that represents a share, or partial ownership, of a publicly traded company”. 

Next I typed in “what is a share” and found the definition - “a unit of a company ownership”

Finally I searched “what is a publicly traded company” and learnt that it is - “a company that can be listed on a stock market”

Exhausted from all my internet searching to my basic question of what a stock is, I decided that it shouldn’t be this hard to understand.

How I Define What A Stock Is

Understanding what a stock is would be more helpful if it was put into simple terms. So here’s my definition: 

                    “A stock is a portion of ownership in a business which can be bought and sold on a stock market”

When a business is available to buy on the stock market, aka “it’s gone public”, it is split up into shares in the exact same way a pizza is cut into slices. How many pieces a pizza can be cut into varies - it could be 2, 12 or 20 slices. How much each slice will be sold for will likely depend on the slice of the pizza. I would sell a larger slice for more money than a smaller slice.

A business is split up and sold in the same way except you don’t get to eat it like you do with delicious pizza. It’s divided up into many slices called shares. Each represents a portion of the company. These shares are then sold based on how much of the company they represent. People like you and I buy these shares and the business takes that money and puts it back into bettering the company.

I had been holding myself back from learning about stocks because it felt too hard to understand. Taking the time to ask the basic, simple questions such as what is a stock has helped me to remove the intimidating factor for investing. And I hope it helps you too.