What is the action
Posted on Oct 19, 2000 08:15:27 AM
Shares are equity securities. This means that a company whose shares you bought, not in front of you under no obligation to repay the money, unlike bonds, which reflects the debt ratio. When buying shares, you become part owner of the company. Are entitled to vote at shareholder meetings and the right to receive income (dividends). But all of the risks borne by you. In bankruptcy of the company shareholders receive funds only after satisfying the claims of creditors. It is very likely that after this has nothing to distribute. The good news is that your losses are limited, and more than the deposit amount you can not lose. Your liability is limited to the amount paid for the shares.
You should also keep in mind that although you are technically co-owner of the company, but a real impact on the company’s business can not. To do this, at least need to have their man in the Board of Directors, which requires the ownership stake of at least a few percent of the share capital. However, very few investors, including professional experience in this regard.
Yield on shares is made up of growth in market value and dividends received. In most cases, the bulk of income consists of gains in market value.
The popularity of shares as a means of attachment is conditioned by the possibility of obtaining high profits. Usually they are higher than for bonds. Most large companies, the probability of bankruptcy that in the foreseeable future is minimal, is called “blue chips” (blue chips).
It is curious that a number of concepts used in the stock market are taken from the lexicon of the casino. Already mentioned blue chips in the casino chips are at maximum rate. One could add a couple of examples. The dealer (dealer) – is the one who quotes the shares on its behalf and at their own expense. In the casino, if someone does not know, this word referred to the dealer. Stake in the stock market means a stake in the casino bid.
Shares can be traded like the stock and OTC markets. At the present time because of the wide spread of e-commerce technical differences related to the execution of transactions are cleared. Of those markets in which’ve traded in the most technologically advanced and comfortable is the MICEX (Moscow Interbank Currency Exchange).
Total shares as an investment class can be recommended to investors who have the level of risk tolerance is not below average. And while of course not to forget about diversification. Conservative investors, in my view, these investments are not especially suitable, since stock prices have a very high volatility.
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