Companies, to raise capital, will sell small portions of their company to the public. These are called stocks. Someone who owns a stock is considered a shareholder. A shareholder has the right to voice his opinion about the companies management and share in the profits.

The reason a company sells stock is because they need. A company may want to purchase property, for example, selling stock will give them the capital to do this. The value at which the stock is sold depends on the growth and success of the company.

If a company is successful, it’s stock price will rise. Companies that have been thriving for a while will have high valued stock. These investments will be safer but may yield small returns. A newer company, because they do not have long proven success, will have cheaper stock. If the company succeeds, their stock may sky rocket in value. On the other hand, the company may fail completely and you will loose your investment.

The National Association of Securities Dealers Automated Quotation System and the New York Stock Exchange are the stock trading places. Those companies who are on this public exchange system can sell their shares on the open market. An investor can choose a small company to purchase which is not on the stock exchange. Those purchases and buying stocks are totally dissimilar purchasing methods.

Stocks are sold and bought in the stock exchange so an investor should have a stock broker to make all the transactions. Brokers take the instructions from the client to buy or sell certain stocks. The investor can grant the broker to trade the stock when it hits a particular price or whatever the stock market can get. The broker tries to find a suitable buyer, or seller to fulfill the investors instruction. The brokers have links with the other brokers who correspond to a different buyer or seller. Every broker will fulfill the instruction of their investor to get commission for the sale.