What Is Stock?

What is stock?

Stock is a stock certificate issued by Limited by Share Ltd to investors when raising funds.

Stock represents the ownership of a shareholding company by its holders (i.e. shareholders).

Such ownership is a comprehensive right, such as attending shareholders' meetings, voting, participating in major decisions of companies, collecting dividends or sharing dividends.

The ownership of the company represented by each share in the same category is equal.

The size of the ownership of a company owned by each shareholder depends on the proportion of the amount of stock held by its shareholders in the total share capital of the company.

Generally, stock can recover its investment through pfer, but it can not ask the company to return its capital contribution.

The relationship between shareholders and companies is not debt and debt relationship.

Shareholders are the owners of the company, with limited contribution to the company, which is responsible for the company's limited liability, taking risks and sharing profits.

Stock is the product of socialized production. It has a history of nearly 400 years.

As a result of human civilization, joint-stock and stock are also applicable to China's socialist market economy.

Enterprises can raise funds for production and operation by issuing stocks publicly to the public.

The state can control more resources with the same funds by controlling the majority stake.

At present, most of the listed companies in Shanghai and Shenzhen stock exchanges are state holding companies.

Classification of stocks:

There are many kinds of stocks, which can be described in a variety of ways.

1. ordinary shares

The common stock is a kind of share that changes with the change of the profit of the company. It is the most common and basic share in the capital structure of the joint stock company, and it is the basic part of the capital of the stock company.

The basic characteristic of common stock is that the return on investment (dividends and dividends) is not agreed upon at the time of purchase, but afterwards determined according to the operating performance of the stock issuing company.

If the company's business performance is good, the earnings of ordinary shares will be high; otherwise, if the business performance is poor, the returns of ordinary shares will be low.

The common stock is the most important and basic share in the capital structure of a joint stock company, and it is also the most risky stock, but it is also the most basic and common stock.

The shares listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange are common stock.

Generally speaking, the characteristics of common stock can be summarized as follows four points:

(1) shareholders holding common shares have the right to obtain dividends, but they must be paid only after they have paid dividends and preferred shares.

The dividend of common stock is not fixed, and generally depends on the net profit of the company.

When the company is running well and its profits continue to increase, the common stock can get more dividends than the preferred stock, and the stock interest rate can even exceed 50%. But in the year when the company runs poorly, it may not even get a cent, or even lose it.

(2) when a company makes liquidation due to bankruptcy or liquidation, ordinary shareholders have the right to divide the company's remaining assets, but ordinary shareholders must get the property after the company's creditors and preferred shareholders.

This shows that ordinary shareholders are more closely related to the fate of the company and share weal and woe.

When the company gains huge profits, ordinary shareholders are the main beneficiaries, and when the company loses money, they are the main losers.

(3) ordinary shareholders generally have the right to speak and vote, that is, they have the right to speak and vote on major issues of the company.

Ordinary shareholders hold one share of the voting rights, and holders of two shares have two voting rights.

Any ordinary shareholder is eligible to participate in the company's highest level meeting - once a year's general meeting of shareholders, but if he refuses to participate, he may delegate an agent to exercise his right to vote.

(4) ordinary shareholders generally have

To sum up, by the first two characteristics of the common stock, it is easy to see that the dividend and residual asset allocation of common stock may be ups and downs, so the risk of ordinary shareholders is the greatest.

In this case, the general shareholders are more concerned about the company's operation and development prospects, and the latter two characteristics of the common stock make the wish a reality, that is, the means to provide and guarantee the general shareholders' interest in the company's operation and development prospects.

However, it is also worth noting that when the investment shares and preferred shares are publicly issued to the general investors, the company should make investors feel that ordinary shares can get a higher dividend than preferred stock. Otherwise, the common stock will take risks both in investment and in dividend than preferred stock. Who else would like to buy common stock?

Ordinary companies issue preferred shares, mainly for investors with "insurance safety", and for those who are more adventurous, ordinary stocks are more attractive.

In short, the issuance of these two different stocks is aimed at attracting more capital with different interests.

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2. preferred stock

Preferred stock is the symmetry of "common stock".

It is a share issued by a joint stock company that has a priority over common stock in the distribution of dividends and residual assets.

Preferred stock is also a kind of credential without time limit. Shareholders of preferred stock are generally not allowed to withdraw shares in the midway (a few redeemable preferred stock exceptions).

The main characteristics of preferred stock are three:

First, the preferred stock usually sets the dividend yield in advance.

Since the dividend rate of preferred stock is fixed in advance, the dividend of preferred stock will not be increased or reduced according to the company's operating conditions, and generally it can not participate in the dividends of the company. However, preferred stock can get dividends before the common stock. For the company, because of the fixed dividend, it does not affect the profit distribution of the company.

Two, the right scope of preferred stock is small.

Preferred shareholders generally do not have the right to vote and to be elected. They do not have the right to vote for the major operation of a joint stock company, but in some cases they can enjoy the right to vote.

If the shareholders' meeting of the company needs to discuss the claim related to the preferred stock, that is, the claim of preferred stock is prior to the common stock, while the priority of the preferred stock lies mainly in two aspects:

(1) dividends are preferred.

The order of share dividend distribution is preferred stock before the common stock.

No matter how much profit the share company may make, as long as the shareholders' meeting decides to distribute dividends, the preferred stock may receive dividends according to the predetermined dividend rate. Even if the dividend is generally reduced or no dividend is paid, the preferred stock should also distribute dividends as usual.

(2) priority of residual asset allocation.

In the dissolution and bankruptcy liquidation of a joint stock company, preferred stock has the priority of assigning the remaining assets of the company, but the priority distribution right of the preferred stock is after the creditor and before the common stock.

Only after paying off creditors' debts can the preferred stock have the right to distribute the remaining assets.

Only after the preferred stock claims can the common stock participate in the distribution.

There are many types of preferred stock. In order to adapt to the needs of some investors who want to get some priority benefits, there are various ways of classifying preferred stock.

The main classifications are as follows:

(1) cumulative preferred stock and non cumulative preferred stock.

Cumulative preferred stock refers to a company that, within a business year, is entitled to claim the same amount of dividends if the company's earnings are not sufficient to distribute the required dividends.

For a non cumulative preferred stock, although the profits obtained by the company will have priority over ordinary shares to earn dividends, if the profits of the company are not sufficient to distribute the dividends according to the stipulated dividend, the shareholders of the non cumulative preferred stock can not ask the company to reissue the company in the following years.

Generally speaking, for investors, cumulative preferred stock is more advantageous than non cumulative preferred stock.

(2) participation in preferred stock and non participating preferred stock.

When the profits of enterprises increase, besides enjoying the interest of the established ratio, they can also participate in the preferred share of profits distribution with the common stock, which is called "participating preferred stock".

In addition to established dividends, the preferred shares no longer participate in profit distribution are called "non participating preferred shares".

Generally speaking, participation in preferred stock is more beneficial to investors than non participation in preferred stock.

(3) convertible preferred stock or not

(4) the preferred stock and the non retractable preferred stock can be recovered.

The recoverable preferred stock is a company that allows the issuance of such shares to recover the preferred shares at the original price plus some compensation.

When the company believes that it can replace the preferred stock with lower dividend, it often exercises this right.

On the contrary, it is the non retractable preference shares.

There are three ways to recover preferred stock: (1) premium: when a company redeem preferred stock, it is carried out at a predetermined price, but because it often brings inconvenience to investors, the issuing company often adds a premium to the preferred stock value.

(2) when a preferred stock is issued, a portion of the fund is made to create a "sinking fund", which is used to redeem part of the preferred shares periodically.

(3) mode of conversion: preferred stock can be converted into common stock according to regulations.

Although convertible preferred stock constitutes a category of preferred stock, it is often regarded as a practical way to recover preferred stock in foreign investment circles, but the initiative of withdrawal is not beneficial to investors but to investors.

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3. post allotment

Post allotment is a stock that is inferior to common stock when interest or interest dividends and residual assets are allocated, usually redistribution of residual interest after the distribution of common shares.

If the profits of the company are huge and the number of shares issued after the issue is limited, the shareholders who buy shares after the issue can obtain very high returns.

After issuing rights issue, the funds raised generally can not generate profits immediately, and investors' scope is restricted, so the utilization rate is not high.

Post allotment is usually issued under the following circumstances:

(1) when the company issues new shares for the purpose of raising capital for expansion, in order not to reduce dividends on the old shares, the new shares will be issued after the new equipment is officially put into use.

(2) when the enterprise is annexed, part of the shareholders of the merged enterprise shall be delivered to adjust the merger ratio.

(3) in a company with government investment, the shares held by the government will be used as a post allotment before the interest rate of the privately held stock reaches a certain level.

Stocks have the following basic characteristics:

(1) non refundable.

Stock is a kind of negotiable securities with no time limit. Investors can no longer ask for stock control after they subscribe to the stock market. They can only sell to the third party in the two market.

The pfer of shares only means changes in the company's shareholders, and does not reduce company capital.

In terms of time limit, as long as the company exists, the shares issued will exist, and the duration of the stock is equal to the duration of the company's existence.

(2) participatory.

Shareholders have the right to attend the general meeting of shareholders and elect the board of directors of the company to participate in the major decisions of the company.

The investment will and economic benefits of shareholders are usually realized through exercising shareholder participation rights.

The right of shareholders to participate in a company's decision depends on how much shares they hold.

From the perspective of practice, as long as the number of shares held by shareholders reaches the actual majority required by the decision results, the decision-making power of the company can be grasps.

(3) profitability.

Shareholders have the right to receive dividends or dividends from the company and obtain the proceeds from their investments.

The size of dividends or dividends depends mainly on the company's profitability and the company's profit distribution policy.

The profitability of stocks is also reflected in the fact that stock investors can get price differentials or achieve asset value.

By selling stocks at a low price and selling at a high price, investors can earn a profit margin. Take Coca Cola Co stock as an example.

If you invest $1000 in the stock market at the end of 1983, you will be able to sell and earn 10 times more profits in July 1994 at a market price of $11554.

In inflation.

Stock prices will rise as the company's original asset reset price rises, thereby avoiding asset devaluation.

Stock is usually seen as a preferred investment target during high inflation.

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(4) circulation.

The liquidity of stocks refers to the tradability of stocks among different investors.

Liquidity is usually measured by the number of negotiable stocks, the volume of shares, and the sensitivity of stock prices to trading volume.

The greater the number of tradable shares, the greater the volume, the less sensitive the price to the volume (the price will not change with the turnover), the better the stock's bolt will be, the worse it will be, and the circulation of the stock will enable investors to sell the shares held in the market and get cash.

Through the circulation of stock and the change of stock price, we can see people's judgement on the development prospect and profit potential of related industries and listed companies.

Those industries and companies that attract large numbers of investors and share prices in the circulation field can continuously absorb large amounts of capital into people's production and business activities through issuing additional shares, and have received the effect of optimizing the allocation of resources.

(5)

The stock market is easy to make money, but it is easier to lose money. Before we enter the market, we should be psychologically prepared. In the stock market, only the market is right.

In China's stock market environment, stocks are all hyped up. Small retail investors can only follow suit and catch up and fall, because you haven't been able to manipulate big funds of stock prices, but can't get real insider information. News that can be heard on the Internet or from others is basically false, and someone deliberately creates an atmosphere that wants you to go in.

I hope the novice should remember a little bit and keep the principal.

Where is the green hill, even if there is no wood burning?

If you miss a wave of market, you don't need to worry. Chances will always be there. See if you can grasp it. Good mentality is important.

We must pay attention to discipline in stock trading, and no discipline will get deeper and deeper.

The stock market is easy to make money, but it is easier to lose money.