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Dictionary / Stock basics

What Is a Stock?

A stock is a small piece of ownership in a company. If you own one share of a company, you own a tiny slice of its business, its profit and its future.

A stock in simple terms

Imagine a pizza shop worth $100,000 split into 100,000 equal pieces. Each piece is worth $1. Buy one piece and you own 1/100,000 of the shop.

Big companies do the same thing, just with billions of pieces. Those pieces are called shares, and people buy and sell them on a stock exchange.

Stock vs share: what is the difference?

In daily talk they mean almost the same thing. "Stock" is the general idea of owning companies. A "share" is one single unit. You might say "I own stock in Apple" and "I own 10 shares of Apple".

How do stocks make you money?

Why do stock prices change?

A share price is what buyers and sellers agree on right now. It moves when people change their minds about the company's future. Good news about sales or profit usually pushes the price up. Bad news pushes it down.

Over a day, prices can jump around for no deep reason. Over many years, the price tends to follow how much money the business makes.

Is $10 enough to start?

Yes, with many brokers. Some let you buy a part of one share, called a fractional share. Small amounts are a fine way to learn. Many beginners start with an index fund so their money is spread across many companies.

See it in real companies

Open a company to see what it sells and how it makes money.

Related terms

TickerThe short code for a stock, like AAPL. Stock exchangeThe market where shares are bought and sold. DividendCash a company pays its owners. Market capWhat the whole company is worth on the market. ETFOne fund that holds many stocks at once. DiversificationNot putting all your money in one place.

See all terms β†’