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What is a Stock?

Understanding stocks and how they work is essential to know before purchasing. Investing and investing wisely are important and almost mandatory to achieving financial success and chances are that when you build an investment strategy, it will most likely include stocks. 

Let's Break it down

Stocks "shares" or "equities" are equity investments that represent ownership in a company.

Public companies sell stock through the stock market on an exchange. There are three major US exchanges, the New York Stock Exchange, NASDAQ, and American Stock Exchange. On the exchanges, investors can buy and sell shares between themselves. 

 

Each public company has a 1-4 unique letter identification know as a "ticker symbol". This represents the company stock in the public market. For example Facebook's ticker is "FB", Apple "APPL", Snapchat "SNAP". 

 

The stock price is the current market's determination of the company's value. The supply and demand for these shares will cause the fluctuation of the share price at any given time. Investors hope that overtime, the price of the stock will increase in value, and thus making them money.

Investing in stocks is a big responsibility so it's important to accrue as much knowledge as you can about the company you are purchasing and how stocks work to make the best informed investment decisions.