Common Stock Types

1002 Words 5 Pages
This letter has one purpose and one purpose only. I’ve received word you are a finance student at one of the most prestigious companies in the world yet don’t know the slightest bit of information on stocks. Simply unacceptable.
Though your first year and a half at college is spent taking general education classes, understanding equity before specialized classes start will not only give you an advantage but will also allow you to see if it really does interest you.
Where do I begin? I suppose by covering stocks in general.
How amazing would it be to a wealthy business owner without ever having to start a business or show up to work once? Simply relax, enjoy life, and watch the money roll in.
Too good to be true? Only in your dreams?
No and
…show more content…
The first being common stock. This is usually what people refer to when mentioning stocks. Over time these shares give greater returns than any other investment out there due to the lack of stability. The second form of stocks is referred to as preferred stock. With this type of share investors are promised a fixed return for the entire time they own the share. Preferred stock is actually more comparable to bonds than common stock. Shares are traded on what is referred to as exchanges. Places connecting buyers with sellers. Picture a peoples’ market where instead of selling fruits, vegetables, and clothing it sells stocks. There’s two main types of exchanges. The first being The New York Stock Exchange. Wall street is typically the market most people visualize when they hear the term stocks. The second market is The Nasdaq. This has no central location and all trades are done over the …show more content…
The only noticible difference is the amount of work the broker does for you. If you want a full service broker it’ll be more expensive but they generally bring in more revenue. On the other side of the spectrum there are hands off brokerages. These brokers simply connect you to the market. There’s no right answer, its all a matter of personal preference and what works best for you. My last piece of advice for you is to pick which type of investor you want to be and stick with it. If you choose to invest as if the market is good and will continue to get better you’re called a bull. If you choose to invest as if the market is going to drop, you’re referred to as a bear. Neither a bull nor a bear investor are wrong, it just depends on the stocks each are buying into. There are other animals as well such as a chickens (someone who is afraid to risk enough for reward) and pigs (those that rashly act on impulses and don’t know what they’re buying into well enough. Be a bull or a bear, not a chicken or pig. Well Chris, if you’re awake by the end of this letter I’ll be impressed. Regardless of how exciting this information is you can now start buying and selling stocks, allowing you to have a leg up on the rest of finance students at Arizona

Related Documents

Related Topics