Own a Small Piece of an American Company With Stock Shares
Companies that are publicly traded on the stock market offer investors small ownership stakes with shares of their stock. These stock shares are traded and rise and fall in price based on public demand. The change in technology has allowed nearly anyone the ability to buy and sell stock shares directly from their own computer at home. Prior to this advance in technology, individual investors had to make trades over the phone or through a broker at a local office.
Technology has also created lower fees associated with buying stocks and has increased the number of stocks being bought and sold versus other investment options like mutual funds and bonds. Several large online brokers like E-Trade, Scottrade, and Tradeking have popped up to take advantage of the growing number of individual do-it-yourself investors.
Stock shares have been around for hundreds of years, even tracing their days back to Christopher Columbus. Many great American companies like General Electric, General Motors, and the modern day AT&T, can trace their shares back more than one hundred years. The Dow Jones Composite Index tracks thirty of the biggest companies in America across a wide range of industries. This could be a great place for beginning investors to look. Firms like Walt Disney, Boeing, and Coca-Cola are included in this index. The index is a way of tracking how the overall market is doing and is the most commonly talked about index on financial programs.
So what’s in it for a small investor to own stock shares of a company? Publicly traded companies report quarterly earnings that show off their revenue earned and any profits for the quarter after paying salaries, inventory costs, marketing, and a series of other costs of goods. Stocks normally trade up on increased revenue and profits. Another reason to own stock shares is dividends. Dividends are paid by many companies as quarterly payments to reward investors and pass some of the earnings back.
Another way for ivestors to profit is by buyouts and acquisitions. Many large companies have gotten to where they are today by acquiring smaller rivals along the way. Buyouts take place with the larger company offering a premium to acquire all the stock shares owned by individual investors. If the investors agree to the acquisition, then the larger rival takes over the smaller company and makes it a part of their larger operation.
The sale of public stock offers company the chance to raise funds needed to grow their businesses. Many companies go public to use money to pay back debt, invest in new technology, or buyout rival companies. Investing in public companies is an American way of helping businesses out.
Investors also have limited options of buying foreign companies. Some of the largest foreign companies sell stock shares on American stock exchanges in an attempt to raise additional funds. International companies offer individual investors an opportunity to invest in growing emerging markets. While America has a large economy, several smaller countries are growing as the number of middle class people grows.
Companies also stock shares, usually in the form of options, to their board of directors. Several companies also offer stock to employees or the ability to purchase shares directly from the company at a cheaper rate than the public market. These practices serves as rewards for hard work and loyalty and are a great way to keep employees motivated and to keep up productivity, as they will reap the rewards with increased share prices.
Individuals wishing to own a share of companies should consider consulting a broker or doing further research online. Owning publicly traded companies has been a great investment strategy over the years and has normally had higher returns than savings bonds.